World shares advance on surprise U.S. job recovery

TOKYO (Reuters) – U.S. stock futures and Asian shares advanced on Monday after a surprise recovery in U.S. employment gave further confidence of a quick economic recovery after many weeks of lockdowns aimed at controlling the coronavirus pandemic.

U.S. S&P500 futures ESc1 rose 0.5% to stand near their highest levels since late February while Japan’s Nikkei .N225 opened more than 1% higher.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.3% in early trade, with South Korea’s Kospi .KS11 rising 1.4%. The Australian share market was closed for a holiday.

U.S. nonfarm payrolls rose by 2.509 million jobs last month – in contrast with consensus estimates of a fall in 8 million jobs after a record plunge of 20.687 million in April.

The Labor Department’s closely watched employment report also showed the jobless rate falling to 13.3% last month from 14.7% in April, a post-World War Two high. Economists had forecast the rate jumping to 19.8%.

“Although there are some risk factors such as weekend demonstrations in the United States and concerns about the second wave of the coronavirus, hopes of economic reopening are taking the lead,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

U.S. bond prices have tumbled, with the 10-year Treasuries yield rising to as high as 0.959% US10YT=RR on Friday, a level last seen in mid-March.

The sharp gains in U.S. bond yields over the last couple of days put more focus on the U.S. central bank, which will hold a two-day policy meeting ending on Wednesday.

Fed Chair Jerome Powell has said the U.S. economy could feel the weight of the economic shutdown for more than a year.

Chinese trade data published on Sunday also showed the ongoing impact from the epidemic.

Exports contracted in May as global coronavirus lockdowns continued to devastate demand, while a sharper-than-expected fall in imports pointed to mounting pressure on manufacturers as global growth stalls.

Oil prices rose after OPEC, Russia and allies agreed on Saturday to extend record oil production cuts until the end of July.

OPEC+ had initially agreed in April that it would cut supply by 9.7 million barrels per day (bpd) during May-June to prop up prices that collapsed due to the coronavirus crisis. Those cuts were due to taper to 7.7 million bpd from July to December.

Brent crude LCOc1 rose more than 2% to $43.32 per barrel while U.S. crude futures CLc1 gained 2% to $40.36.

Gold slipped to $1,681.0 per ounce XAU=, near its lowest levels since late April.

In the currency market, safe-haven currencies were softer while risk-sensitive ones outperformed.

The Japanese yen stood at 109.67 to the dollar JPY=, near Friday’s 10-week low of 109.85.

The euro changed hands at $1.1303 EUR=, not far off three-month high of $1.1384 touched on Friday while the Australian dollar stood at $0.6993 AUD=D4, near its highest this year.

The offshore Chinese yuan hit its highest level in five weeks at 7.0669 to the dollar CNH=.


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