Asian markets rebounded strongly Monday on better-than-expected US jobs data while traders took a more positive view of the European Central Bank’s position on the eurozone debt crisis.
The single currency hit its highest level against the dollar in a month as concerns over the eurozone and the US eased, while hopes grew that Greece will meet its obligations to qualify for another tranche of rescue cash. Tokyo rose 1.72 percent by the break, Hong Kong jumped 2.03 percent, Sydney was 1.21 percent higher and Seoul climbed 2.05 percent. Shanghai added 0.28 percent as dealers tentatively awaited the release of key economic data on the world’s number two economy later in the week. In the United States the Labor Department said Friday that the economy added 163,000 jobs in July — the strongest gain since February and beating forecasts for a gain of 100,000.
Despite a 0.1 percentage point rise in the unemployment rate to 8.3 percent the figures were welcomed by investors who took the report as a sign of resilience in the world’s number one economy. The result sent Wall Street surging. The Dow jumped 1.69 percent, the Nasdaq climbed 2.00 percent and the S&P 500 rose 1.90 percent. The figures were welcome news for the markets, which had been sent tumbling on Thursday after the ECB failed to announce any concrete plans to support the euro, despite comment from its head Mario Draghi that it would do whatever was needed.
However, the initial disappointment was reversed in Europe and on Wall Street after bank officials said Friday it could intervene and buy the bonds of struggling eurozone countries without unanimous approval.
Those comments raised hopes that a bond buying programme to help struggling countries such as Spain and Italy is still possible. The ECB “seems to be cooking up something internally”, Jung Seung-jae, analyst at Mirae Asset Securities in South Korea, told Dow Jones Newswires. “Action may come earlier than expected.” On currency markets the euro surged in early trade to a one-month high of $1.2442 as traders became more confident in higher-risk, higher-yielding assets. The currency later eased and sat at $1.2402, still up from $1.2381 in late trade in New York Friday.
The euro bought 97.20 yen compared with 97.30 yen in New York, although well up from the 95.18 yen in Tokyo on Friday. The dollar bought 78.40 yen, from 78.59 yen. Also providing some support to markets were comments from Greece’s international creditors Sunday that the country was committed to hammering out further spending cuts to secure a new batch of aid.
