Japanese stocks bounced on Monday and the US dollar held near four-year highs against a basket of currencies, as upbeat US jobs data boosted sentiment after a week of worries about global growth and geopolitical tensions frayed investor nerves.
Tokyo’s Nikkei jumped 0.9 percent in early trade while South Korean shares rose 0.3 percent after a market holiday on Friday.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.2 percent. Some signs of calm in the region was seen towards the end of last week after the civil unrest in Hong Kong had spooked investors.
The US Labor Department reported nonfarm payrolls rose 248,000 in September, 33,000 more than median forecast while the jobless rate fell two-tenths of a point to a six-year low of 5.9 percent.
Stocks on Wall Street jumped more than 1.0 percent on Friday, with the S&P 500 posting its best day in almost two months to end at USD 1,967.90.
The US dollar was another clear winner, as the data highlighted the relative strength of the US economy as many other major economies remain sluggish.
The dollar index stood at 86.679, little changed so far on Monday but having risen 1.3 percent on Friday to hit a high of 86.746 , its strongest since June 2010.
The euro traded at USD 1.2515, having fallen to USD 1.2505 on Friday, its lowest level in more than two years.
The dollar fetched 109.82 yen, near last week’s six-year high of 110.09 yen.
“The theme in the currency market at the moment is the divergence of economic growth… But the pace of the dollar’s rally may slow down a bit from now. The 110 yen level seems to be heavy,” said Shusuke Yamada, chief Japan FX strategist at Bank of America Merrill Lynch.
In early thin Asian trade, sterling hit a 11-month low USD 1.5943 while the New Zealand dollar fell 0.7 percent to USD 0.7719, threatening to fall below one-year low of 0.7708 marked last week.
As the dollar rose, gold came under pressure, falling 0.5 percent to hit a 15-month low of USD 1,183.51 per ounce.
The US Treasuries bond prices fell on the jobs data, but they quickly recovered most of the lost ground. The 10-year notes yielded 2.4412 percent on Monday, little changed from just before the data release.
While job growth was solid, some investors also focused on the small growth in wages. Average hourly earnings rose just 2.0 percent from a year earlier, well below above three percent before the Great recession in 2008-09.
As limited wage growth suggests low inflationary pressure, affording the Federal Reserve room to wait before raising interest rates, interest rate futures markets showed limited reaction, moving only a few ticks.
Federal fund rate futures are pricing in full chance of a rate hike in July.
Asia has little data to trade on, but one focus later in the day is on Brazil, where leftist President Dilma Rousseff placed first in Sunday’s election but did not get enough votes to avoid a runoff on Oct. 26.
She will face pro-business rival Aecio Neves, who made a dramatic late surge into second place.
Over the past month, the Brazilian real and shares tended to weaken when polls show Rousseff gaining as many investors believe a more market-friendly administration could help boost demand for Brazilian assets.
The real hit six-year low of 2.5070 reais per dollar on Friday, hitting the 2.50 mark, a level seen by some as fuelling inflation and increasing the chances of additional central bank market intervention.