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Asia stocks weaker after soft US jobs, China trade data

Asian stocks were mostly lower on Monday after a disappointing US jobs report raised questions about the underlying strength of the world's biggest economy and worse-than-expected trade numbers out of China.

twitter-logoReuters | May 9, 2016 | Updated 10:46 IST
Asia stocks weaker after soft US jobs, China trade data
Photo: Reuters

Asian stocks were mostly lower on Monday after a disappointing US jobs report raised questions about the underlying strength of the world's biggest economy and worse-than-expected trade numbers out of China.

Meanwhile, crude oil prices soared on supply woes stemming from devastating wildfires in Canada.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.2 per cent. Australian stocks shed 0.4 per cent and South Korea's Kospi fell 0.6 per cent.

Shanghai stocks retreated more than 2 per cent after data released over the weekend showed Chinese exports fell 1.8 per cent in April.

Japan's Nikkei bucked the trend and rose 0.5 per cent as the yen's recent surge appeared to halt for now.

"Investor sentiment has finally recovered. Unless the dollar falls below the 105 yen mark, the Nikkei will likely start recovering," said Kazuhiro Takahashi, equity strategist at Daiwa Securities in Tokyo.

US shares posted modest gains on Friday as the weaker-than-expected US jobs report fanned expectations that the Federal Reserve would have to hike interest rates at a very slow pace. The Dow gained 0.4 per cent and the S&P 500 edged up 0.3 per cent on Friday.

US non-farm payrolls increased by 160,000 in April, the smallest gain since September, and below the 200,000 economists had expected. It prompted some financial institutions to lower their expectations of an interest rate hike for this year to just one from two before the report.

The dollar was up 0.2 per cent at 107.29 yen. The US currency initially fell in reaction to the lacklustre jobs report on Friday but bounced after New York Federal Reserve President William Dudley said two rate hikes this year were still a "reasonable expectation".

The dollar remained within reach of an 18-month low of 105.55 yen plumbed last week.

"The market now sees one rate hike in December, and none next year. Some may still expect a hike in June but that probability has fallen as the rise in US prices are slowing," wrote Junichi Makino, an economist at SMBC Nikko Securities.

"This shows that the Fed's policies cannot be counted on to reverse recent yen appreciation. If the Bank of Japan wants to weaken the yen, it will have to do it through its own policies."

The euro was down 0.1 per cent at $1.1398 after touching $1.1380, its lowest since April 29.

The dollar index brushed 94.056, its highest since April 28.

The Australian dollar was little changed at $0.7373 after sliding more than 1 per cent on Friday after the country's central bank slashed its inflation forecasts.

US crude was up 1.9 per cent at $45.52 a barrel and Brent crude rose 1.4 per cent to $46.00 a barrel as a wildfire raged through Canada's oil sands region, shutting half of the country's vast oil sands capacity.

The oil market was also pondering weekend news of Saudi Arabia's appointment of a new energy minister to take over from veteran oil minister Ali al-Naimi. The new appointee, Khalid al-Falih, is a believer in reform in the oil market.

Copper slipped as the dollar firmed. A stronger greenback tends to make commodities like copper more expensive for non-US buyers.

Three-month copper on the London Metal Exchange fell to as low as $4,720 a tonne, its lowest in a month.

Spot gold eased by 0.3 per cent to $1,285.16 an ounce. The precious metal had hit a 15-month peak of $1.303.60 an ounce last week during a broad retreat by the dollar.

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