Asian shares mixed, dollar strong at 7-month high
TOKYO, NOV 9:Asian stocks were mixed, with Japanese and Chinese shares up, while the dollar stood at a 7-month high against peers on Monday after robust U.S. jobs data bolstered expectations of a Federal Reserve interest rate hike in December.
Data on Friday showed nonfarm payrolls increased 271,000 in October, the largest gain since last December. The U.S. unemployment rate fell to 5.0 per cent, the lowest since April 2008.
Prospects of the Fed hiking rates for the first time in almost a decade and ending seven years of easy monetary policy, which have pump-primed global markets with flush liquidity, weighed on some riskier assets.
MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.8 per cent, while Australian shares lost 1.5 per cent on lower commodity prices. South Korea's Kospi dropped 0.3 per cent and Hong Kong's Hang Seng fell 0.2 per cent.
The gainers included Tokyo's Nikkei which rose 1.9 per cent after the yen weakened significantly against the dollar.
Shanghai shares rose 1.8 per cent after securities regulators said it would allow initial public offerings to resume after a July halt.
The gains also followed disappointing Chinese trade data released on Sunday showed that the government will have to do more to stimulate domestic demand.
In recent months, financial markets have been buffeted by uncertainty over the timing of the Fed's rate hike, with some investors worrying that higher borrowing costs in the United States could hurt a shaky global economy.
However, the fall in some Asian stock prices was measured, reflecting trading on Wall Street, which bounced from a selloff to end little changed on Friday.
"With (Fed Chair) Janet Yellen holding firm on a December rate hike expectation during her testimony to Congress on Thursday, and then the massive beat from the non-farm payrolls (NFP) on Friday, 2015 has been realigned with the beginning of the year's expectations of at least one rate hike," wrote Evan Lucas, market strategist at IG in Melbourne.
"What is also interesting from this realignment is the markets have not thrown a 'tantrum' or gone into 'hysterics' - yet. Time will tell, but the orderly movements of the NFP on Friday suggests the market will take a small increase to the Fed funds rate in its stride."
Interest rates futures were pricing in a 70 per cent probability that the U.S. central bank will raise borrowing costs next month, according to the CME Group's FedWatch.
In currencies, the dollar index, a measure of the greenback's strength against a basket of key currencies, stood near a 7-month high of 99.345.
The dollar advanced to a 2-1/2-month peak of 123.46 yen. The euro was steady at $1.0744, in striking distance of a 6-month trough of $1.0704 struck on Friday.
Supporting the U.S. currency was higher Treasury yields. U.S. debt yields soared on Friday in the wake of the strong jobs data, with the 2-year yield reaching a 5-1/2-year high.
Oil rebounded slightly on bargain hunting after sliding on the back of dollar's surge, which makes the dollar-denominated commodity more expensive for purchasers.
U.S. crude bounced 0.4 per cent to $44.51 a barrel after shedding 2 per cent on Friday.