Asian Stocks Eye Early Gains After US Jobs Report: Markets Wrap

(Bloomberg) -- Most Asian stocks are set to open higher in early trading after strong US jobs data underscored the health of the world’s largest economy and boosted soft landing hopes.

Most Read from Bloomberg

• Singapore Ends 181 Years of Horse Racing to Make Way for Homes

• From Cleveland to Chicago, NFL Teams Dream of Domed Stadiums

• What Do US Vehicle Regulators Have Against Tiny Cars?

• For a Master of Brutalist Provocations, a Modest Museum Appraisal

• Mexico City Restricts Airbnb Rentals to Curb ‘Gentrification’

Australian shares and Japan equity futures rose while contracts in Hong Kong slipped. US contracts edged higher early Monday after the S&P 500 rose 0.9% on Friday. The dollar was steady following its best week in two years as Treasury yields surged amid recalibrated bets on the size of the Federal Reserve’s next rate cut.

The so-called soft landing narrative has again taken over markets, pushing back concerns of a US recession after employers added 254,000 jobs in September — the most in six months — and the jobless rate unexpectedly declined. A slew of other economic data last week — including private-sector job numbers and a measure of the services sector — painted a picture of a strong US economy.

“Tailwinds into Asia are probably more significant than anywhere else in the world” with the Goldilocks US economy and fresh Chinese stimulus, said Kyle Rodda, a senior analyst at Capital.com. “This is a very opportune time to reallocate to Asia given the fact there are signs of clear economic strength and therefore outperformance in cyclical sectors of which Asia is heavily weighted towards.”

Asian currencies, however, are set to further unwind last quarter’s rally after a gauge of the dollar climbed 0.4%, pressuring emerging market peers. The Korean won slumped more than 1% after the jobs report while currency forwards for the Indonesian rupiah, Philippine peso and Thai baht all fell, indicating early losses when spot markets reopen.

While expectations of the Fed slashing rates have adjusted, “more needs to be done,” said Win Thin, global head of markets strategy at Brown Brothers Harriman. “This week brings key U.S. inflation data that should help extend the dollar recovery and keep downward pressure on emerging market FX.”

Traders will soon shift to preparing for China’s reopening on Tuesday after stimulus measures announced prior to the Golden Week holiday lifted Hong Kong shares to their highest since March 2022. Officials from the National Development and Reform Commission will host a briefing on implementing incremental economic policies.