On Monday, stocks rose amid speculations that interest rates will remain low and accommodating due to receding inflationary pressure. Additionally, oil and gas prices jumped after a cyber-attack was launched on a U.S. pipeline operator which unnerved markets.
Asia Pacific shares index, namely MSCI’s broadest, outside Japan rose by 0.35%, while U.S. stock futures rose by 0.24%.
In more than a year, Australian stocks hit their highest, which was boosted by gains in miners. Additionally, it is to be noted that shares in China rose by 0.46%, while Japanese shares gained 0.91%.
The rise in Asian stock comes after U.S. nonfarm payrolls data, released on Friday, showed that jobs growth unexpectedly slowed in April. Reportedly, the employment numbers fell well short of expectations, the US economy added 226,000 jobs in April and the unemployment rate ticked back to 6.1%. It is to be noted, that not only did the new payrolls miss forecasts for 1 million new jobs, but also the march gains were revised downward to 770,000 from 916,000. The fall in payroll numbers gave equities a lift but put downward pressure on the dollar and U.S. Treasury yields.
It is to be noted that the Oil and gasoline futures extended gains after a cyber-attack shut down a U.S. pipeline operator. The US pipeline operator provides nearly half of the U.S. east coast’s fuel supply.
Chris Weston, head of research at broker Pepperstone in Melbourne, wrote in a memo that “It certainly pushes back the timetable for Fed tapering, perhaps to December from the prior expectations of the Jackson Hole Symposium in late August,”.
He additionally stated that “A softer payrolls is good for the reflation trade; the dollar weakened across the FX spectrum. We’ve also seen a solid bid in equity indices and futures are up.”
Reportedly, on Friday, the Dow Jones Industrial Average and the S&P 500, rose to record highs after disappointing data on the U.S. jobs market eased concerns about a spike in consumer prices and provided a relief that Fed’s accommodative stance would be continued in future.
The relief provided by the disappointing data on the US jobs had come after some investors had been placing bets that a robust U.S. economic recovery from the coronavirus pandemic would force the Federal Reserve to raise interest rates earlier than the central bank had outlined. The interest rates would have been increased to deal with the rising inflation which might have prevailed in the market due to robust economic recovery and rising employment in the market.
However, as has been reported, the weak nonfarm payrolls report caused a rapid reversal in some of these trades, which significantly rippled through stocks, bonds, and major currencies.
The focus will now emphatically shift to U.S. consumer price data which will help investors determine whether they should scale back their inflation expectations even further.
Reportedly, the dollar index against a basket of six major currencies edged up to 90.252 but was still near its weakest since Feb. 25.
In more than two months, the British pound jumped to the highest against the greenback. But traders are of the opinion that Scottish independence could immensely curb sterling’s gains.
On Monday, the yield on benchmark 10-year Treasury notes steadied at 1.5983% in Asia after having plunged to a two-month low of 1.4690% on Friday.
U.S. crude ticked up 1.17% to $65.66 a barrel. Brent crude rose to $69.04 per barrel in Asian trading as the disruption to U.S. supplies rattled energy markets.
The White House is reportedly working closely with the top U.S. fuel pipeline operator Colonial Pipeline, to help it recover from a ransomware attack that forced the company to shut its main fuel lines.