US stocks rebounded from the biggest selloff since May, while Treasuries fell after unexpectedly strong hiring data bolstered confidence in the American economy, underscoring the Federal Reserve's case for raising interest rates. Crude fell below $US45 a barrel.
ASX futures closed up 10 points or 0.2 per cent at 5661. The Australian dollar was 0.3 per cent higher at US76.05¢. The spot price of iron ore rose 1.4 per cent to $US62.80 a tonne.
Broad-based payroll gains that topped estimates boosted sentiment among equity investors a day after stocks suffered the biggest drop in six weeks. Gains were strongest among tech shares that have been whipsawed between gains and losses in recent days. The Bloomberg Dollar Spot Index was flat as tepid wage growth stoked concern that inflationary pressure remains weak. The 10-year Treasury yield climbed to 2.39 per cent. Gold futures fell.
The hiring report supported the Federal Reserve's stance that recent signs of labour market sluggishness are transitory, though the tepid wage gains gave fuel to arguments that weakness remains. While stocks advanced on the perceived economic strength, the US dollar and Treasury markets focused on the implications for the Fed's next rate hike. Janus Henderson's Bill Gross told Bloomberg Radio that he expects the central bank to go through with a third increase this year, likely in December.
"What this should do is to keep the Fed (primed) for another rate hike," Quincy Krosby, a market strategist at Prudential Financial, said by phone. "The market has absorbed the fact finally that Janet Yellen is seemingly intent on moving toward a neutral rate. If this were a weak number, the market could be down because again the notion would be that she's raising rates in an environment in which the economy is pulling back."
Bond yields have climbed around the world after a sell-off in debt this week stoked by a number of central banks stepping up talk of tighter policy conditions. The yen slumped to an eight-week low after the Bank of Japan stepped in to curb the rise in rates. Bearish comments from investors Jeffrey Gundlach and Ray Dalio added to the impression of a sea change for bonds, with German 10-year yields climbing to an 18-month high as Treasuries also slipped.
Here are the main moves in markets:
Stocks
- The S&P; 500 rose 0.6 per cent to 2425.05 at 4pm in New York, bouncing back from a 0.9 per cent slide. The index advanced 0.1 per cent in the holiday-shortened week.
- The Nasdaq 100 Index jumped 1.1 per cent. It's swung between gains and losses off at least 0.8 per cent in each of the four days in the period, ending higher by 0.2 per cent.
- The Stoxx Europe 600 index dropped 0.1 per cent, paring a loss after the US hiring data. The gauge rose 0.2 per cent in the five days to halt a four-week slide.
- Emerging-market shares fell 0.3 per cent.
Bonds
- The yield on 10-year Treasuries added two basis points to 2.398 per cent. It's advanced eight basis points in the week.
- German 10-year yields rose one basis point to 0.57 per cent after rising 9 basis points on Thursday. French benchmark yields were one basis point higher.
- Yields in the Bloomberg USD Emerging Market Sovereign Bond Index advanced 18 basis points to 4.81 per cent this week, the most since the week ending November 18.
Currencies
- The Bloomberg Dollar Spot Index rose less than 0.1 per cent, capping a weekly advance of 0.4 per cent.
- The yen dropped 0.6 per cent to 113.934 per dollar, reversing an earlier gain of 0.1 per cent. The currency is down more than 1 per cent for the week, heading for the biggest drop since the end of April.
- The euro fell 0.2 per cent to $US1.1404 after jumping 0.6 per cent in the previous session, while the pound weakened 0.6 per cent to $US1.2889.
Commodities
- West Texas Intermediate fell 2.8 per cent to settle at $US44.23 a barrel, more than erasing Thursday's 0.9 per cent gain. Oil lost 4 per cent for the week as a decline in US stockpiles failed to convince investors that global markets are rebalancing.
- Gold futures lost 1.1 per cent to settle at $US1209.70 an ounce. The precious metal fell 2.6 per cent in the week for a fifth straight slide, the longest since December.
Asia
- The MSCI Asia Pacific Index declined 0.6 per cent, for its biggest weekly loss since early March. Japan's Topix index slipped 0.5 per cent, its first weekly loss in a month. Australia's S&P;/ASX 200 Index lost 1 per cent. South Korea's Kospi dropped 0.3 per cent.
- Hong Kong's Hang Seng fell 0.3 per cent and the Hang Seng China Enterprises Index lost 0.5 per cent.
- Australian 10-year yields rose 9 basis points to 2.73 per cent, advancing for the eighth time in 10 sessions.
- Japan 10-year yields fell less than one basis point, to 0.088 per cent The central bank offered to buy debt with maturities of more than five years to 10 years, after yields on its benchmark 10-year securities more than doubled in the past week.