US jobs report lifts Asia markets but China data limit gains

Japan's Nikkei 225 Stock Average rallied 2.9%, and South Korea's Kospi also gained.

Story highlights

  • The MSCI Asia Pacific index moved up 1.1%, encouraged by U.S. jobs report
  • Japan economy buoyed by current account surplus
  • Hong Kong Hang Seng underperformed regional peers

Asian shares rebounded as investors were encouraged by a better-than-expected US jobs report, but gains were limited by poor economic data from China.

The MSCI Asia Pacific index advanced 1.1% after suffering its biggest weekly drop in a year last week. Sentiment improved after the US reported jobs growth in May, reassuring investors that the US recovery is on course.

Friday's US jobs report attracted even more interest than usual, given recent uncertainty over whether the Federal Reserve might soon begin scaling back its $85bn-a-month asset purchase program -- a decision in which the health of the US labor market will be a key determinant.

But in the end the data offered little in the way of concrete guidance. Non-farm payrolls rose 175,000 last month, a shade more than the consensus forecast, although the jobless rate edged up to 7.6% from 7.5%.

Analysts said the jobs report had not provided a decisive signal for the Fed.

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"With unemployment rate edging up to 7.6%, the report will unlikely change Fed policies one way or another and we maintain the view that any tapering is unlikely to come before September," Crédit Agricole said in a research note.

Japan's Nikkei 225 Stock Average rallied 2.9%, snapping a three-day losing streak and shying away from bear market territory. Still, the Nikkei is 17 % below its May 23 peak. Toyota Motor, the world's largest carmaker by sales, climbed 5.3% while Sharp soared 12% after Qualcomm agreed to a second stock purchase in the unprofitable television maker.

The Japanese market also was buoyed by a larger-than-expected current account surplus of Y750bn for April, and an upward revision in first-quarter economic growth to 4.1 % in annualised terms. The strong figures lifted the yen to Y97.80 per US dollar, from Y97.94 late Friday.

Another factor aiding Japan's rally was the Government Pension Investment Fund's announcement on Friday that the world's largest manager of retirement savings will buy more equities.

South Korea's Kospi Composite index added 0.3% after slumping 1.8% on Friday for its biggest daily percentage fall in nearly 11 months. Index heavyweight Samsung Electronics rebounded from its biggest one-day drop in nine months on Friday, up 0.7% after sinking 6% in the previous session.

Hong Kong underperformed regional peers, with the Hang Seng index inching up 0.1% after China trade, inflation and lending data fell short of market expectations, adding to concern about the slowing economy. The weekend slate of data showed unexpected weakness in May trade figures and domestic economic activity struggling to pick up.

"The China train is hardly derailing, but it does seem to be running out of puff somewhat for the moment," ANZ Bank said in a research note.

Markets in Australia and China were closed for a holiday.

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