Asian stocks were mostly lower on Monday after a disappointing U.S. jobs report raised questions about the underlying strength of the world’s biggest economy and worse-than-expected trade numbers out of China.
Meanwhile, crude oil prices soared on supply woes stemming from devastating wildfires in Canada.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dipped 0.2 percent. Australian stocks shed 0.4 percent and South Korea’s Kospi .KS11 fell 0.6 percent.
Shanghai stocks .SSEC retreated more than 2 percent after data released over the weekend showed Chinese exports fell 1.8 percent in April. ECONCN
Japan’s Nikkei .N225 bucked the trend and rose 0.5 percent as the yen’s recent surge appeared to halt for now.
“Investor sentiment has finally recovered. Unless the dollar falls below the 105 yen mark, the Nikkei will likely start recovering,” said Kazuhiro Takahashi, equity strategist at Daiwa Securities in Tokyo.
U.S. shares posted modest gains on Friday as the weaker-than-expected U.S. jobs report fanned expectations that the Federal Reserve would have to hike interest rates at a very slow pace. The Dow gained 0.4 percent .DJI and the S&P 500 .SPX edged up 0.3 percent on Friday.
U.S. non-farm payrolls increased by 160,000 in April, the smallest gain since September, and below the 200,000 economists had expected. It prompted some financial institutions to lower their expectations of an interest rate hike for this year to just one from two before the report.
The dollar was up 0.2 percent at 107.29 yen JPY=. The U.S. currency initially fell in reaction to the lackluster jobs report on Friday but bounced after New York Federal Reserve President William Dudley said two rate hikes this year were still a “reasonable expectation”.
The dollar remained within reach of an 18-month low of 105.55 yen plumbed last week.
“The market now sees one rate hike in December, and none next year. Some may still expect a hike in June but that probability has fallen as the rise in U.S. prices are slowing,” wrote Junichi Makino, an economist at SMBC Nikko Securities.
“This shows that the Fed’s policies cannot be counted on to reverse recent yen appreciation. If the Bank of Japan wants to weaken the yen, it will have to do it through its own policies.”
The euro was down 0.1 percent at $1.1398 EUR= after touching $1.1380, its lowest since April 29.
The dollar index .DXY brushed 94.056, its highest since April 28.
The Australian dollar was little changed at $0.7373 AUD=D4 after sliding more than 1 percent on Friday after the country’s central bank slashed its inflation forecasts.
U.S. crude CLc1 was up 1.9 percent at $45.52 a barrel and Brent crude LCOc1 rose 1.4 percent to $46.00 a barrel as a wildfire raged through Canada’s oil sands region, shutting half of the country’s vast oil sands capacity.
The oil market was also pondering weekend news of Saudi Arabia’s appointment of a new energy minister to take over from veteran oil minister Ali al-Naimi. The new appointee, Khalid al-Falih, is a believer in reform in the oil market. [O/R]
Copper slipped as the dollar firmed. A stronger greenback tends to make commodities like copper more expensive for non-U.S. buyers.
Three-month copper on the London Metal Exchange fell to as low as $4,720 a ton CMCU3, its lowest in a month.
Spot gold XAU= eased by 0.3 percent to $1,285.16 an ounce. The precious metal had hit a 15-month peak of $1.303.60 an ounce last week during a broad retreat by the dollar.
(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Shri Navaratnam and Sam Holmes)