Asian Shares Steady, Dollar Firm After Upbeat U.S. Job Data

TOKYO (Reuters) -
A man looks at an electronic stock board of a securities firm in Tokyo. (AP Photo/Koji Sasahara)

Asia stocks hovered near four-month highs on Monday after a mixed performance on Wall Street at the close of last week, while the dollar firmed against the yen following strong U.S. employment and manufacturing data.

Spread-betters expect European markets to start on a cautious note, with London’s FTSE and Paris’s CAC seen falling marginally and Frankfurt’s DAX expected to open up a tad.

MSCI’s broadest index of Asia-Pacific shares outside Japan was a shade weaker. It had scaled a four-month peak on Friday amid a surge by its global peers.

Trade was subdued with many of the region’s markets closed for the Lunar New Year. China’s financial markets are closed all week, while those in South Korea are shut until Thursday.

Hong Kong’s stock exchange closed at midday, with the Hang Seng up 0.2 percent.

Australian shares ended half-a-percent higher, as did Japan’s Nikkei.

U.S. S&P 500 e-mini futures last traded basically flat.

On Wall Street on Friday, optimism from a surge in January U.S. job growth was offset by a weaker-than-expected outlook from Inc. that battered retail stocks. The Dow nudged up 0.26 percent while the Nasdaq shed 0.25 percent.

“Key points for the markets this week will be how the remaining U.S. corporate earnings releases turn out, and whether they are in line with recent upbeat data,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.

“While corporate earnings and fundamentals remain key, political developments, notably the U.S.-China trade situation, remain potential risk factors.”

China’s sprawling services sector maintained a solid pace of expansion in January even though growth moderated slightly, a private survey showed on Sunday, offering continued support for the world’s second-largest economy as manufacturing cools.

A U.S. Labor Department report on Friday showed nonfarm payrolls jumped by a stronger-than-forecast 304,000 jobs last month, the largest gain since February 2018.

That report, along with better-than-expected ISM manufacturing activity numbers for January, pointed to underlying strength in the world’s biggest economy.

“After last week’s risk appetite revival, the data pulse and the tone of Fed speakers will be important. For the Goldilocks market to continue, we need to find a delicate balance between improving data and still-neutral central banks,” strategists at ANZ wrote.

Global equity markets performed strongly last week after the Federal Reserve pledged to be patient with further interest-rate hikes, signaling a potential end to its tightening cycle.

Friday’s robust economic data triggered a sharp rebound in U.S. Treasury yields, in turn lifting the dollar.

On Monday, the U.S. currency climbed a quarter of a percent to 109.76 yen, after advancing 0.6 percent on Friday.

The euro was slightly lower at $1.1442 after getting pulled back from a high of $1.1488 on Friday.

The Australian dollar dropped 0.2 percent to $0.7230 , falling a second session after slipping 0.4 percent on Friday.

The benchmark 10-year U.S. Treasury yield was at 2.695 percent after climbing nearly 6 basis points on Friday to pull away from a four-week low of 2.619 percent hit earlier last week.

In the commodity market, spot gold fell nearly half-a-percent to $1,312.60, moving away from a more than 9-month high of $1,326.30 reached last week.

West Texas Intermediate (WTI) U.S. crude oil futures gave up some of last week’s gains and were last down 8 cents, or 0.1 percent, at $55.19 a barrel. On Friday, WTI futures had rallied 2.7 percent on the upbeat U.S. job report, signs that Washington’s sanctions on Venezuelan exports have helped tighten supply and data showing U.S. drillers cut the number of oil rigs.

Brent crude futures were last up 3 cents, or 0.05 percent, at $62.78.