BEIJING, June 5 (BNA): Asian stocks followed Wall Street higher on Monday after strong US employment data along with slim gains in wages suggested a potential recession may be a long way off, but also that inflationary pressures are weakening.
The Tokyo benchmark gained nearly 2%. Shanghai, Hong Kong and Seoul prices also rose.
Wall Street’s benchmark S&P 500 jumped 1.5% on Friday, putting it on the verge of entering what traders call a “bull market” after rising nearly 20% in seven months.
Government data on Friday showed employers hired more people than expected in May, but wage gains were slowing. This indicates that the economy is strong but the upward pressure on inflation may weaken, reducing the Fed’s need to cool business activity with more interest rate hikes, according to the Associated Press (AP).
“Markets appear poised to kick off bullish momentum last week as risk appetite finds a soft cushion in hopes of a soft landing in the US,” Stephen Innes of SBI Asset Management said in a report.
Tokyo’s Nikkei 225 rose 1.9% to 32124.17 and the Shanghai Composite rose less than 0.1% to 3232.80. Hong Kong’s Hang Seng Index rose 0.7%, to 19,078.22.
The Kospi in Seoul rose 0.6% at 2616.25 and the S&P ASX 200 in Sydney jumped 1.2% to 7232.10.
Singapore and Jakarta won. Markets in New Zealand and Thailand are closed for the holidays.
And on Wall Street, the S&P 500 rose to 4,282.37. The Dow Jones Industrial Average rose 2.1% to 33762.76 and the Nasdaq Composite rose 1.1% to 13240.77.
Industrial companies, energy producers and banks rose. Exxon Mobil advanced 2.3% as crude oil prices rose on hopes that the flexible economy will burn more fuel.
The Labor Department’s monthly jobs report showed a slowdown in wage increases despite a boost in hiring.
While this may discourage workers trying to keep up with higher prices, investors believe that slowing wage gains will mean less upward pressure on inflation.
Unemployment rates also rose last month more than expected, rising to 3.7% from a five-decade low. That means more slack in the labor market and appears to contradict employment data, which comes from a separate survey.
After this report, traders were largely expecting the Fed to hold interest rates steady at its next meeting in two weeks. If that happens, it will be the first time it has not raised prices in over a year.
High interest rates have also hurt many small and medium-sized banks, in part because customers withdraw deposits in search of higher interest in money market funds.
Several high-profile bank failures since March have rocked the market, prompting Wall Street to look for other potential weak links. Many of them rallied under the tightest scrutiny in the aftermath of the jobs report. PacWest Bancorp jumped 14.1%, for example, narrowing its loss for the year to 66.6%.
But Fed officials also recently warned that a pause in rate hikes in June wouldn’t necessarily spell the end of the hikes.
In energy markets, US benchmark crude rose 94 cents to $72.68 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $1.64 on Friday to $71.74. Brent crude, the price basis for international oil trade, rose 85 cents to $76.98 a barrel in London. It added $1.85 in the previous session to $76.13.
The dollar rose to 140.07 yen from 139.94 yen on Friday. The euro fell to $1.0701 from $1.0712.
HF