A relief rally swept across Asian share markets on Monday after the latest US jobs report managed to impress with its strength while also easing fears of inflation and faster rate hikes, a neat feat that whetted risk appetites globally.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS climbed 1.1 per cent, for a third session of gains.
South Korea .KS11 rose 1.0 per cent while Australia's main index added 0.7 per cent, boosting by mining shares on news that Australia could be exempt from new US trade tariffs on steel and aluminium imports.
E-Mini futures for the S&P 500 ESc1 put on another 0.3 per cent.
Japan's Nikkei .N225 jumped 1.5 per cent, showing little immediate reaction as Prime Minister Shinzo Abe came under renewed fire over suspicions of cronyism involving the sale of state-owned land.
Inflation worries faded on Friday after US data showed nonfarm payrolls jumped by 313,000 jobs last month, but annual growth in average hourly earnings slowed to 2.6 per cent after a spike in January.
The pullback in wages tempered speculation the Federal Reserve would project four rate hikes - or dot plots - at its policy meeting next week, instead of the current three.
“The release threaded the stock needle perfectly, exhibiting strong overall net job adds alongside an increase in the participation rate and tepid wages suggesting labour demand is being met by new entrants into the workforce,” said analysts at JPMorgan in a note.
“In reality though the market is probably reading too much into a single jobs report,” they cautioned.
“A fourth dot on March 21 may have been averted but the labour market is increasingly demonstrating evidence of tightness and this will inevitably translate into upside wage pressure.”
For now, Wall Street was happy to take the data at face value and the Dow .DJI jumped 1.77 per cent, while the S&P 500 .SPX gained 1.74 per cent and the Nasdaq .IXIC 1.79 per cent.
On the week, the S&P rose 3.5 per cent, the Dow 3.25 per cent and Nasdaq 4.2 per cent.
The jobs news likewise lifted riskier currencies, including the Mexican peso and Canadian and Australian dollars, while weighing on the safe-haven yen.
Those cross currents left the US dollar a shade lower against a basket of currencies at 90.028 .DXY. The euro was last up a fraction at $1.2317 EUR=, sandwiched between support at $1.2270 and resistance at $1.2296.
The dollar edged down on the yen to 106.58 JPY=, having bounced 0.5 per cent on Friday.
Investors had trimmed holdings of yen last week on news US President Donald Trump was prepared to meet with North Korea’s Kim Jong Un, a potential breakthrough in nuclear tensions in the region.
According to Reuters, US officials on Sunday defended Trump’s decision, saying the move was not just for show and not a gift to Pyongyang.
The mix of brisk US economic growth and restrained inflation was a positive one for most commodities, with industrial metals and oil performing well.
Spot gold XAU= was steady on Monday at $1,323.60 an ounce.
Brent crude LCOc1 futures rose 21 cents to $65.70 a barrel, after surging almost 3 per cent on Friday. US crude CLc1 futures rose 16 cents to $62.20 a barrel.
