SYDNEY (Reuters) — Asian shares and
currencies were mostly firmer on Monday in the wake of surprisingly
weak U.S. jobs numbers that revived speculation the Federal Reserve
could keep policy loose for longer.
Friday's soft report pulled down bond yields and the dollar, while
lifting prices for gold and many commodities. It was also seen as
beneficial for some emerging market countries which had been
pressured by funds flocking to western assets.
Activity in Asia on Monday was curbed by a holiday in Japan. South
Korea managed a rise of 0.6 percent <.KS11> in line with MSCI's
broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS>
which was also 0.6 percent higher.
Shanghai <.SSEC> rose 0.3 percent after China set its yuan at a
record high for a second straight session, extending the gradual
appreciation of the currency.
Most other currencies in the region gained on the U.S. dollar which
skidded to 103.42 yen, having shed a full yen on Friday to end at
104.08 in New York. The euro was steady at $1.3668, compared to
$1.3590 before the job figures hit dealing screens on Friday.
U.S. payrolls rose just 74,000 in December, the smallest increase in
nearly three years and far below the 196,000 forecast. Private
payroll operator ADT calculated that the private sector added
238,000 new jobs in December.
The jobless rate fell sharply to 6.7 percent though largely because
of a fall in the participation rate as people dropped out of the
labor force.
Still, the unemployment rate is now very close to the 6.5 percent
threshold the Fed had nominated as a level where it might start
considering raising interest rates.
More recently the central bank has watered down that threshold,
saying it would keep rates near zero well past the time when the
jobless rate slips under 6.5 percent.
Markets took the weakness of payrolls growth as adding to the case
for keeping rates low for longer and pushed out the expected timing
of the first hike. A move to 0.5 percent is now fully priced-in by
August 2015.
Yields on 10-year Treasury paper were down at 2.85 percent after
diving 10 basis points on Friday.
Yet the general assumption among economists was that the jobs report
would not sway the Fed from winding down its bond buying campaign.
"Optimism that employment growth was beginning to take off has been
dashed, at least for now, but we do not think the data suggest the
economy is much weaker than we had thought," said RBS chief
economist Michelle Girard.
"Thus, we do not think the Fed will alter the pace of tapering. We
still expect the Fed to announce another $10 billion reduction in
the monthly purchase pace at the January meeting."
There will be plenty of opportunity this week to hear from the Fed
itself with seven separate appearances in the diary for officials,
including Chairman Ben Bernanke on Thursday. Fed Bank of Atlanta
President Dennis Lockhart gets the ball rolling with a speech later
on Monday.
Also due this week are figures on U.S. retail sales and on inflation
in both the United States and Europe.
In commodity markets, gold extended its rally to a one-month peak at
$1,254.05 an ounce having climbed 1.5 percent on Friday.
The price for nickel gained as a ban on unprocessed nickel laterite
ore exports from top producer Indonesia came into effect, fanning a
technical rally across other metals.
Nickel futures were up 0.5 percent, on top of a 3.8 percent jump on
Friday.
Oil prices were little changed with Nymex oil futures flat at
$92.72, while Brent crude oil futures rose 9 cents to $107.34 a
barrel.
There was little reaction as yet to news of a deal for Iran to
freeze parts of its nuclear program in return for sanctions relief
that will take effect on January 20. Iran will receive some easing
of economic sanctions, including the suspension of restrictions on
exports of petrochemicals.
