Asia’s emerging-market stocks and currencies advanced while oil rose above $36 a barrel after Friday’s U.S. jobs report brightened the outlook for global growth and fueled demand for riskier assets.
The MSCI Asia Pacific excluding Japan Index climbed to a two-month high, while Japan’s Topix declined for the first time in a week. European and U.S. stock index futures fell. Malaysia’s ringgit and Indonesia’s rupiah rose to their strongest levels since at least August. Australia’s currency and copper retreated as a technical indicator signaled recent rallies were excessive. Crude advanced to a two-month high in New York, after surging by about 10 percent in each of the last two weeks, while iron ore prices jumped in China.
The latest U.S. jobs figures added to a string of reports that have sketched out a picture of relative health in the world’s biggest economy, helping spur a rebound in global stocks and commodities that began in mid-February. China’s leaders set an expansion goal of 6.5 percent to 7 percent for 2016 at an on-going annual meeting of the legislature, down from last year’s target of around 7 percent, and said they are planning a record-high budget deficit. The European Central Bank is expected to deliver a package of easing measures at a March 10 policy meeting to revive euro-area growth and inflation.
“The U.S. recovery remains intact and we have not had a global recession without a U.S. recession in probably 100 years,” Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about $21 billion, said in an e-mail to clients. “But I still think that despite the solid risk recovery over the past three weeks, returns are likely to be very modest in 2016, at best, and downside protection will be needed.”
China’s is due to report February data on the country’s foreign-currency reserves on Monday, while euro-area finance ministers meet to discuss economic adjustment plans for Greece and Cyprus as well as budgets for 2016. Germany reported a 0.1 percent decline in its January factory orders, less than the 0.3 percent decline forecast in a Bloomberg survey.
The MSCI Asia Pacific excluding Japan Index gained 0.5 percent as of 7:08 a.m. London time. The Shanghai Composite Index added 0.8 percent, while benchmarks in Malaysia, South Korea and Thailand climbed to their highs for the year. The Topix declined 1 percent, after surging 15 percent over the last three weeks.
“We’re at a level where we can easily get selling,” said Yoshinori Ogawa, senior strategist at Okasan Securities Co. “There are concerns over earnings, and I get the impression that moves to buy back happened in a state of wariness. Long-term funds probably haven’t come in yet.”
Australia’s S&P/ASX 200 Index gained 1 percent, climbing for the sixth day in a row. BHP Billiton Ltd., the world’s biggest miner, jumped 5 percent in Sydney after surging 13 percent last week.
Standard & Poor’s 500 Index futures slipped 0.1 percent, as did contracts on the Euro Stoxx 50 Index.
The ringgit gained as much as 1.1 percent to 4.0765 per dollar, the strongest level since August. The increase in crude prices is brightening prospects for Malaysia, Asia’s only major net oil exporter. The rupiah strengthened for a 13th day, its best winning streak since 2010.
The yuan fell 0.1 percent, snapping a four-day run of gains, as China’s leaders refrained from announcing specific support measures for the exchange rate at their biggest gathering of the year.The nation will push ahead with efforts to make the currency more convertible and promote its use overseas over the next five years, according to a development plan released at the National People’s Congress on Saturday.
Australia’s dollar fell 0.4 percent, after a 4.4 percent weekly surge that marked its best performance since 2011. The currency’s 14-day relative strength index was 70 at the end of last week, a threshold that indicates to some traders a reversal of direction is likely.
The Bloomberg Dollar Spot Index, a gauge of the currency against 10 major peers, rose for the first time in six days. Odds of the Federal Reserve raising interest rates by December ticked up after the payrolls data, with the probability at 68 percent, up from 53 percent a week ago and 49 percent a month ago, according to Fed funds futures tracked by Bloomberg.
West Texas Intermediate crude climbed for the fifth time in six days, rising 1.8 percent to $36.55 a barrel in New York. It’s headed for the highest close since Jan. 4. Speculators reduced their short positions by the most in 10 months in the week ended March 1, CFTC data show.
Signs the Organization of Petroleum Exporting Countries will act to address the global surplus that has depressed prices for at least the past year is buoying oil, along with a decline in the number of active rigs in the U.S. The number of rigs has plunged 75 percent since September 2014 and ended last week at the lowest level since 1999, data show.
“We’re starting to see U.S. production levels decline and if that continues, it could easily drive momentum in oil a bit further,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone. “Still, the higher prices go, the more vulnerable they are to some sort of correction, given we’re moving into a period of seasonal weakness.”
Copper fell 1.2 percent, after closing above $5,000 a ton last week for the first time in four months. It’s relative strength index was 76 on March 4, above the 70 level that indicates a likely change of direction. Investors in the metal shifted to a net-long position on March 1 for the first time in four months, weekly data show.
Iron ore futures jumped to their daily limit of 407 yuan ($62.47) a metric ton on the Dalian Commodity Exchange, up 4.9 percent and the highest level in almost six months. Steel in China also rose by the daily limit, with steel reinforcement bars for May up 5 percent to 2,073 yuan a ton on the Shanghai Futures Exchange.
The Bloomberg Commodity Index rose 0.1 percent, after a 3.9 percent gain last week that marked its biggest advance since July 2012. It’s climbing for a sixth day, the longest winning streak in two years.
Australian bonds led declines among sovereign debt, with yields on notes due in a decade climbing three basis points to 2.58 percent. The rate on similar-maturity U.S. Treasuries was little changed at 1.88 percent, after adding four basis points on Friday.
The cost of insuring Asian corporate and sovereign debt fell to a two-month low, with the Markit iTraxx Asia index of credit-default swaps retreating one basis point to 146 basis points, according to prices from Australia & New Zealand Banking Group Ltd.