Inside Financial Markets

Asian Stocks Climb With Dollar Before U.S. Jobs as Copper Falls

asian markets fallAsian Stocks Climb With Dollar Before U.S. Jobs as Copper Falls

Asian stocks rose, poised for a second weekly gain, and the dollar strengthened before data that may show the U.S. jobs market improved and after European policy makers signaled borrowing costs will be kept low. Asian bond risk slid, while copper and silver fell.

The MSCI Asia Pacific Index climbed 0.7 percent to 131.60 as of 12:49 p.m. in Tokyo, taking its weekly gain to 0.8 percent. The Dollar Index, which tracks the currency against six major peers, rose 0.8 percent, the most since June 19. Standard & Poor’s 500 Index (SPX) futures jumped 0.9 percent after U.S. markets were closed yesterday for Independence Day. The Markit iTraxx Asia index, which measures the cost of insuring bonds against default, sank 5 basis points. Copper futures lost 1.2 percent and silver dropped 1 percent.

U.S. employers added almost as many workers last month as in May and the jobless rate probably fell, according to Bloomberg surveys of economists. European Central Bank President Mario Draghi pledged yesterday to keep interest rates at a record low for an “extended period.” The rhetoric contrasts with that of the Federal Reserve, which has fueled a global stock and bond rout by signaling debt purchases could be scaled back this year.

“Continued central bank stimulus across European economies is supporting sentiment and we have seen that flow through to Asian markets,” Matthew Sherwood, head of investment market research at Perpetual Ltd. in Sydney, said by phone. “Strong payrolls mean a strong U.S. economy, which is an important foundation particularly for emerging markets given their trade exposure. But that will bring forward expectations about the Fed’s tapering. The market could be volatile.”

Samsung Profit

Japan’s Topix Index (TPX) added 1.1 percent, extending its third weekly jump to 4.4 percent, while Australia’s S&P/ASX 200 measure climbed 0.8 percent for a gain of 0.6 percent this week. South Korea’s Kospi (KOSPI) was little changed as Samsung Electronics Co. (005930), the index’s biggest company, slumped 3.4 percent on lower-than-estimated profit.

The Hang Seng China Enterprises Index jumped 1.9 percent in Hong Kong as Industrial & Commercial Bank of China Ltd., the world’s largest lender, gained 1.9 percent. Temasek Holdings Pte, the biggest foreign investor in Chinese banks, said it’s not concerned by a cash crunch that dragged stocks lower last month and plans to increase its assets in the nation.

The U.S. unemployment rate probably fell to 7.5 percent in June, matching April’s four-year low and down from 7.6 percent in May, according to the median of 82 economists’ estimates in a Bloomberg survey before the Labor Department report today. Payrolls grew by 165,000 workers, after rising 175,000 in May, the median of 70 projections shows.

Global Rout

“All and sundry await tonight’s U.S. non-farm payrolls report as the next test of U.S. sentiment,” Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington, wrote in an e-mail to clients today.

Global equities have lost about $4 trillion in value and U.S. Treasury yields have climbed since May 22, when Fed Chairman Ben S. Bernanke indicated the central bank’s asset-buying program could be tapered should the job market continue to improve.

The purchases, currently at $85 billion a month, have helped the MSCI World gauge rally 17 percent in the past year and fueled gains in emerging markets. Ten-year U.S. bond yields have surged more than half a percentage point since May 21.

The Dollar Index is poised for a third weekly advance with a 0.9 percent gain for the period. The dollar rose 0.2 percent to 100.25 yen in Tokyo after touching 100.86 on July 3, the highest since May 31. South Korea’s won slipped 0.4 percent to 1,142.43 per dollar today, almost erasing this week’s advance.

European Policy

“While the spigot is gradually shut in the U.S., the spigot in Europe and U.K. will remain open,” Nizam Idris, head of fixed income and currency strategy at Macquarie Bank Ltd. In Singapore, said by phone. “This does not change the fact that the dollar will remain strong against emerging-market currencies.”

The ECB’s policy stance will remain accommodative as long as needed as risks to euro-area growth remain “on the downside,” Draghi said yesterday.

Mark Carney, making his debut as the Bank of England’s governor, said recent increases in market interest rates were “not warranted by the recent developments in the domestic economy.” Both central banks kept their key interest rates at 0.5 percent.

Gold, Copper

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan slid 5 basis points to 158.5, Australia & New Zealand Banking Group Ltd. prices show. The gauge is headed for its lowest close since July 2, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

Commodities priced in dollars tumbled as the greenback gained. Spot gold fell 0.4 percent to $1,244.80 an ounce, trimming its first weekly advance in three. The price has risen 1 percent this week as a drop to a three-year low on June 28 spurred purchases. Silver for immediate delivery sank 1 percent to $19.3680 an ounce, set for a third weekly decline.

Copper for delivery in three months tumbled 1.2 percent today to $6,868 a metric ton, trimming this week’s advance to 1.8 percent. Tin contracts fell 0.9 percent.


Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)