Asian stocks advanced on Monday after a surprisingly strong U.S. jobs report sparked optimism about the economy, sparking a rally on Wall Street.
US futures fell and oil prices fell as well.
Japan’s Nikkei 225 index gained 1.9% to 39,354.63 after the yen sank against the US dollar. The Japanese currency has bounced on speculation about the central bank’s interest rate plans since Prime Minister Shigeru Ishiba took office last week.
In a policy speech on Friday, Ishiba said he wants to see wage increases that outpace inflation and will promote investment to create “a virtuous circle of growth and distribution.” He promised economic support for low-income households and measures for regional revitalization and disaster resilience.
But he offered no major new initiatives and his initial public support ratings are around 50% or less, relatively low for a new leader, according to Japanese media. He plans to dissolve parliament on Wednesday to hold elections on October 27.
After rising against the dollar, the yen fell again late last week. Early on Monday, the dollar was trading at 148.57 yen, down from 148.72 yen on Friday. Lower interest rates tend to boost the prices of stocks and other assets.
Elsewhere in Asia, Hong Kong’s Hang Seng Index rose 1.4% to 23,056.53 and Seoul’s Kospi rose 1.1% to 2,597.34.
Taiwan’s Taiex gained 1.3%.
Mainland Chinese markets reopen on Tuesday after a week-long holiday, and the government said it plans to explain details of economic stimulus plans at a morning news conference in Beijing. Before the Oct. 1 National Day holiday began, policy announcements aimed at reviving the ailing housing market sent stock benchmarks sharply higher and could bring more volatility this week.
“Further fiscal stimulus is needed to stabilize the housing market and restructure local government debts, and structural reforms to address overcapacity and deflation issues are needed to turn around the economy,” B of A Securities said in a research note, pointing out continued declines. in home sales, home prices and credit growth.
On Friday, the S&P 500 rose 0.9% and approached its all-time high set on Monday, closing at 5,751.07. The Dow Jones gained 0.8% to 42,352.75 and the Nasdaq rose 1.2% to 18,137.85.
Leading the way were banks, airlines, cruise operators and other businesses whose profits can benefit the most from a stronger economy in which people work and are better able to pay for things. Norwegian Cruise Line rose 4.9%, JPMorgan Chase rose 3.5% and small companies in the Russell 2000 index gained 1.5%.
Concerns about tensions in the Middle East still cast a shadow, sending oil prices sharply higher as the world waits to see how Israel will respond to an Oct. 1 missile attack by Iran.
But benchmark U.S. crude oil fell 19 cents to $74.19 a barrel early Monday, while Brent crude, the international standard, lost 29 cents to $77.76 a barrel.
Treasury yields soared on Friday after the U.S. government said employers added 254,000 more jobs to their payrolls last month than they cut. This is an acceleration compared to the hiring rate of 159,000 employees in August and exceeded economists’ forecasts.
Recent encouraging data on the economy has raised hopes that the labor market will hold firm after the Federal Reserve pumped the brakes on the economy with higher rates to stamp out high inflation.
The Federal Reserve has begun cutting interest rates and Friday’s jobs report was so strong that traders now predict it won’t make another half-point cut in interest rates before the end of the year, after doing so in September.
In other trading early Monday, the euro rose to $1.0973 from $1.0967.