A rain-soaked street in Hong Kong, where the benchmark stock index rose on Monday.
Photo: isaac lawrence/Agence France-Presse/Getty ImagesInternational shares rose, following U.S. stocks higher after strong jobs data gave investors more confidence that an economic recovery is under way.
In late Monday morning trade in Hong Kong, Japan’s Nikkei 225 added 1% each, while Hong Kong’s Hang Seng Index, the Shanghai Composite and South Korea’s Kospi Composite rose less than 0.3% each. Markets in Australia are closed for a holiday.
S&P 500 futures inched up 0.3%, suggesting U.S. stocks could rise Monday.
U.S. stocks closed sharply higher on Friday after data showed the country unexpectedly added 2.5 million jobs in May. The Dow Jones Industrial Average jumped 3.2%, while the S&P 500 advanced 2.6% and the Nasdaq Composite added 2.1%.
All three U.S. indexes have regained much of the losses they incurred after the coronavirus pandemic shut businesses and curtailed spending in March. The Dow is down 5% for the year, while the S&P 500 is down 1.1%. Some major markets in Asia are also nearing positive territory for the year, with the Nikkei down around 2% and the Kospi down less than 1%, FactSet shows.
“The strong set of labor data Friday gave more confirmation that an economic recovery is ongoing,” said Eli Lee, head of investment strategy at Bank of Singapore.
The reopening of the economy has seen financials, industrials, energy and real-estate stocks rallying and investors will continue to rotate funds into sectors such as these for a few more months, said Mr. Lee.
The dollar continued to weaken, with the WSJ Dollar Index, which measures the U.S. currency against 16 others, declining to 91.09 from 91.15. It has fallen more than 6% from a peak in March.
Mr. Lee said he expects dollar weakness to persist for the next six to 12 months, benefiting stocks in Europe and the emerging markets in Asia. However, he said he remained cautious about betting on a sharp recovery, given uncertainties around the U.S. presidential election, escalating tensions between the U.S. and China, and possible second waves of coronavirus infections.
Brent crude, the global gauge of crude-oil prices, rose 1.2% to $42.81 a barrel after the 23-nation alliance of the Organization of the Petroleum Exporting Countries and its allies agreed to collective cuts of 9.6 million barrels a day until the end of next month.
Suvro Sarkar, regional energy analyst at DBS Bank, said massive stimulus by central banks had fed into energy markets, and crude prices now already implied a robust economic recovery. “The oil market is looking a bit too optimistic,” Mr. Sarkar said, and could sell off if, for example, countries were unwilling to maintain supply curbs.
In the longer term, however, he said Brent crude could reach about $50 a barrel by year-end since rising demand, plus this year’s cuts to production, could tip the global oil market into a supply deficit for next year.
The yield on the benchmark 10-year U.S. Treasury note fell to 0.899%, from 0.903%. Bond yields fall as prices rise.
Write to Chong Koh Ping at chong.kohping@wsj.com
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June 08, 2020 at 11:55AM
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