Asian Stocks Up, but Aftershocks from Disappointing U.S. Jobs Report Remain


From Gina Lee – Asia Pacific stocks were largely up on Monday morning, with a rally in Japanese stocks being thwarted by the disappointing US employment report on Friday with the Prime Minister’s impending resignation.

Japan’s Nikkei 225 rose 1.83% at 9:53 p.m. ET (1:53 p.m. GMT), with Prime Minister Yoshihide Suga planned resignation Raise hopes that his successor would better manage the country’s COVID-19 outbreak and increase spending.

South Korea’s KOSPI gained 0.12%.

In Australia, the ASX 200 lost 0.63%, with the Reserve Bank of Australia due to announce its monetary policy decision on Tuesday.

Hong Kong’s Hang Seng Index gained 0.52%.

China’s Shanghai Composite rose 0.43% while the Shenzhen component fell 0.68%, with the country releasing trade and inflation data later in the week.

Meanwhile, the People’s Bank of China is planning further tightening of regulations in the e-commerce sector, and the Beijing City People’s Government proposed an investment in ridesharing company Didi Global Inc. (NYSE: DIDI).

Investors continue to recover from the shock of the latest US employment report. The number of people employed outside the farm stood at 235,000, the smallest increase in seven months, while the unemployment rate was 5.2% in August. The report could cause the Federal Reserve to postpone starting asset reduction when it meets later in the month.

However, US President Joe Biden could make his decision within the week of whether to re-nominate Fed Chairman Jerome Powell for a second term while Dallas Fed President Robert Kaplan will address on Wednesday. The US markets are closed on Monday for a public holiday so there is no cash trading in Treasuries.

“It amplifies the impact of the delta variant on current economic conditions, and therefore policy makers need to change direction and be agile,” George Boubouras, research director at K2 Asset Management, told Bloomberg.

“It reinforces that some form of stimulus will remain in the system for the foreseeable future.”

In Japan, according to Boubouras, there will be more upside with a Suga “Abenomics variation” that will include more targeted fiscal stimulus and mixed monetary policy.

The story goes on

Across the Atlantic, the European Central Bank will announce its monetary policy decision on Thursday.

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