Asian stocks extend gains as US jobs trump virus worries

Hong Kong rose one percent after climbing almost three percent Thursday, while Tokyo finished 0.7 percent higher and Shanghai jumped two percent

HONG KONG (AFP) - Asian investors welcomed a forecast-busting US jobs report to send regional equities higher yesterday, though an acceleration in virus infections across the world’s top economy tempered big gains.

While the US registered more than 50,000 new cases for a second straight day and authorities across the country reimposed containment measures, traders backed up with a wall of government and central bank cash chose to look to the positives.

And a near-five million jump in employment in June, combined with promising vaccine tests, provided the platform for another market rally that saw the Nasdaq clock up yet another record.

The jobs report showed people returning to jobs in hard-hit and crucial sectors such as leisure and hospitality, which accounted for just under half of the increase.

The US advances, and a strong performance in Europe - where countries are pressing ahead with lockdown easing - gave Asia a strong lead, which investors picked up on.

Hong Kong rose one percent after climbing almost three percent Thursday, while Tokyo finished 0.7 percent higher and Shanghai jumped two percent.

Sydney climbed 0.4 percent and Seoul put on 0.8 percent, while there were healthy advances in Taipei, Seoul, Wellington, Singapore and Mumbai. Manila reversed early losses.

London dipped in early trade, while Paris was flat and Frankfurt edged up.

“There’s still a general positive sentiment about how quickly we’re seeing the recovery,” said Chris Gaffney at TIAA Bank.

“But we do think you’re going to see the recovery level off, especially if we continue to see higher case numbers on the virus.”

Analysts warned that while the employment data were good, jobless claims were still elevated - at 1.43 million last week, which was slightly better than the week before but missed expectations. They pointed out that the latest spike in infections and the reclosure of some businesses around the US, particularly in the Sun Belt, could set the recovery back.

“The non-farm payrolls report is a mid-June snapshot, which might have been the ‘sweet spot’ of near-term employment optimism as the virus situation in the US has deteriorated sharply since,” warned AxiCorp’s Stephen Innes.

“It would be tough to take the better-than-expected... payrolls numbers and extrapolate that there will be a V-shaped recovery in the US,” he added. “The economy has brought back only about 30 percent of the jobs lost.”
White House economic adviser Larry Kudlow injected some nervousness into trading floors by telling Fox Business Network that the US was “very unhappy with China”.

He added that there were “going to be export restrictions, particularly with respect to military, national security and some sensitive high technology”.