Asian markets up on economic optimism before US jobs report

TOKYO: Asian stocks rose on Friday and the dollar hit a seven-week peak, riding on economic optimism ahead of a US job report later in the day.
Spreadbetters expected Britain’s FTSE to open 0.2 per cent higher, Germany’s DAX to edge up 0.07 per cent and France’s CAC to open down 0.2 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.3 per cent, poised for a 1.6 per cent gain on the week.
Japan’s Nikkei .N225 climbed 0.3 per cent after setting a new two-year high, Australian stocks rose 0.9 per cent and South Korea’s KOSPI advanced 0.9 per cent.
The S&P 500 posted its sixth straight record high close on Thursday, its longest run since 1997, as investors cheered increased prospects for a tax overhaul with Congress moving closer to agreement on a budget resolution. “We have the very first step where Congress passed the budget details, so you’re one step nearer to tax reform,” said Heng Koon How, head of markets strategy for United Overseas Bank (UOB) in Singapore.
Data on Thursday showed the number of Americans filing for unemployment benefits fell more than expected, the trade deficit narrowing, and evidence of strong orders for core capital goods.
The latest boost in US economic optimism lifted Treasury yields and helped take the dollar index against a basket of major currencies to the seven-week high.
US data this week has been solid on the whole, with investor focus now turned to the closely-watched nonfarm payrolls report due at 1230 GMT.
Of key interest to the financial markets was how hurricanes Harvey and Irma may have affected the labour market in September.
Interest rate futures traders are now pricing in an 86 per cent likelihood of a December rate hike, up from 78 per cent a week ago, according to the CME Group’s FedWatch Tool.
The dollar index was 0.1 per cent higher at 94.057 after rising to 94.112, its highest since August 16.
The euro extended the previous day’s losses, falling to a two-month low of $1.1686. It was on track to end 1 per cent lower on the week.
The dollar added 0.15 per cent to 112.990 yen to edge towards a two-month peak of 113.260 scaled last week. The pound was particularly vulnerable against the bullish dollar after a poorly-received keynote speech by British Prime Minister Theresa May deepened market doubts about her ability to govern effectively.
Sterling retreated to a one-month low of $1.3073 after sliding 1 per cent overnight.
The Australian dollar was down 0.5 per cent at $0.7753 after falling to as low as $0.7743, its weakest since mid-July. Falling bond prices pushed up the 10-year US Treasury yield to 2.353 per cent, nudging it back towards a three-month high of 2.371 set on Monday. The yield had momentarily dropped to 2.300 per cent mid-week.
In commodities, oil markets were cautious on Friday as traders monitored a tropical storm heading for the Gulf of Mexico and as China remained closed for a week-long public holiday.
But the prospect of extended oil production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and other producers led by Russia helped support prices.
US West Texas Intermediate (WTI) crude CLc1 was trading at $50.63 per barrel at 0650 GMT, down 16 cents from its last close. Brent crude LCOc1 was down 12 cents at $56.88 a barrel.
Activity was subdued due to the Golden Week holiday in China and because traders were monitoring tropical storm Nate, which has triggered US Gulf production and refinery closures just weeks after several hurricanes pummelled the region.
Traders said they were closing positions ahead of the expected arrival of the storm as they did not want to be caught with open trades over the weekend.
The Louisiana Offshore Oil Port, one of the most important fuel handling facilities in the Gulf of Mexico, said on Friday that it had suspended vessel offloading operations.
Storm Nate, which the US National Hurricane Center said could intensify into a hurricane, is off the coast of Nicaragua, heading into a region of the Gulf populated by offshore oil platforms that pump more than 1.6 million barrels of crude per day (bpd), or about 17 per cent of US output.
BP and Chevron were shutting production at all Gulf platforms, while Royal Dutch Shell and Anadarko Petroleum suspended some Gulf activity. Exxon Mobil, Statoil and other producers have withdrawn personnel from their platforms.
Phillips 66 on Thursday night was shutting its 247,000 bpd Alliance refinery in Louisiana. — Reuters

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