Asia stocks buoyant after US jobs, oil extends gains
Most Asian stocks began the week in buoyant mood Monday, cheering a strong pick-up in US job creation while weighing China’s weekend decision to lower its growth target but expand spending.
Energy firms were again among the biggest gainers as oil continued its recovery thanks to the jobs data and as US producers cut the number of rigs in operation to combat a global supply glut that has hammered prices.
At the start of its annual policy congress Saturday China set a target of 6.5-7.0 percent expansion this year — as expected — as it tries to combat a slowdown in global trade and to transition from dependence on exports and investments to consumer-led growth.
But in a two-hour speech, Premier Li Keqiang promised to loosen the money belt and projected the biggest budget deficit in several decades, putting on the back-burner its drive to combat bulging government debt.
He also pledged reform of state-owned enterprises, many of which are plagued by inefficiencies and overcapacity.
“With the increase of the deficit ratio, stronger fiscal stimulus will set a floor for growth and economic expansion is likely to become faster later this year,” China Merchants Securities analyst Sun Binbin told Bloomberg News.
China’s leaders have sought to reassure jittery global markets in recent weeks with a unified message that authorities still have the tools to keep the economy — a key driver of world growth — from a further slowdown.
Shanghai stocks ended up 0.8 percent, with investors also cheered by an expected delay in a plan to speed up initial public offerings.
Among other markets, Sydney rose one percent and Seoul put on 0.1 percent. There were also gains in Taipei, Manila and Bangkok.
Hong Kong was slightly higher in the afternoon following last week’s gains, but Tokyo slipped 0.6 percent after climbing around six percent over the course of last week.
– ‘Global recession unlikely’ –
More good news out of the United States also provided a platform from which to rally as the Labor Department reported the economy added 242,000 jobs in February.
While the data also showed a drop in wages the figures came after better-than-expected US reports on private jobs, the manufacturing sector, construction spending and auto sales.
The results came as some relief for markets, which in the first two months of the year were racked by concerns of a global recession as economies from China and Australia to Europe and the Americas struggle.
“It is highly unlikely that the world economy could go into recession. The US recovery remains intact and we have not had a global recession without a US recession in probably 100 years,” Matthew Sherwood, head of investment strategy at Perpetual in Sydney, said in an email to clients.
Oil prices pushed upwards again as US firms cut their rig count while traders grow increasingly confident producer giants led by Russia and Saudi Arabia will work to temper output.
In afternoon trade US benchmark West Texas Intermediate was up two percent and Brent was 1.8 percent higher.
The slight recovery in the commodity also boosted energy firms, with BHP Billiton in Sydney up five percent and rival Rio Tinto 3.5 percent up. In Hong Kong CNOOC was two percent higher as PetroChina climbed 0.9 percent.
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