Asia starts on strong note

Markets edge up as weak US jobs report strengthens case for more monetary stimulus from the Federal Reserve



Asian markets mostly ended higher as the strength in the Chinese stocks and a continue wave of risk appetite as a surprisingly weak US jobs report on Friday strengthened the case for more monetary stimulus from the Federal Reserve. The Dow Jones Industrial Average closed above the 11,000 mark for the first time in five months on Friday and supported the upward bias for the Asian equities. However, the Japanese markets were closed and the movements were mostly thin in the first session of the week.

On Friday, in the much keenly awaited data, the US Labor Department reported that the total non farm employment in the country witnessed a sizable drop of 95,000 in September following a revised decrease of 57,000 jobs in August. Economists had expected employment to come in flat compared to the loss of 54,000 jobs originally reported for the previous month. The Labor Department also said that the unemployment rate remained stuck at 9.6% in September, unchanged from the previous month. This grossly negative reading made it quite certain that the Fed would venture upon further quantitative easing in the near course as the economy still continues to experience what has been termed as a jobless recovery.

Meanwhile, the global central bankers participating in weekend meetings of the International Monetary Fund rejected concerns that proposed rules to raise bank capital requirements will weigh on the global recovery, and said they are pressing ahead with efforts to limit the contagion risks from fall out of large institutions. Central bankers said they expect leaders of the Group of 20 developed and large emerging countries, known as the G-20, to approve the Basel III measures when they meet next month in Seoul.

US stocks witnessed notable move to the upside over the course of the trading day on Friday, as a continued decrease in employment added to optimism about additional quantitative easing measures from the Federal Reserve. The strength in the markets lifted the Dow above 11,000 for the first time since May. The Dow added 57.90 points or 0.5% to 11,006.48.

The Australian stocks witnessed decent gains as the market closed at a five-month high and the Australian dollar rose on the back of firmer commodity prices. The banking and the metals stocks were in a good nick, adding to the gains recorded in the last week and the benchmark S&P/ASX 200 index gained 16.1 points, or 0.34% to close at 4697.5 points, while the broader All Ordinaries index had rose 21.6 points, or 0.46% to end the day at 4762.1 points.

In China, the stocks continued to edge up, surging on strong intraday gains as bullish cues from the US markets and ideas that the strong global liquidity would be conducive or stocks in the world's fastest growing economy. The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, added 68.20 points, or 2.5%, at 2,806, the highest since May 5.

After the market hours, China lifted the proportion of funds that banks must set aside as reserves by half a percentage point on Monday, the first such move since May, in an effort to drain cash from the economy, according to media report, which cited four unidentified sources. The report said the increase would apply to the nation's six largest commercial lenders, boosting their reserve ratios to 17.5%. The policy tightening is temporary and will be in place for two months, the report said.

In Mumbai, the key benchmark edged higher, snapping last two days' losses as world stocks rose on expectation the US Federal Reserve and other central banks will step in to boost the economy. The market breadth was strong. Mid and small-cap indices on BSE outperformed the Sensex. Index heavyweight Reliance Industries (RIL) extended initial gains. As per provisional figures, the BSE 30-share Sensex gained 70.04 points or 0.35% to 20,320.30. The S&P CNX Nifty was up 28.10 points or 0.46% to 6,131.55 as per provisional figures.

In other markets, the Straits Times index in Singapore gained 0.32%, Hang Seng index in Hong Kong edged soared 1.15% while the TSEC index in Taiwan lost 0.82%. US dollar stayed mixed after the sluggish non-farm data as investors await more cues on the economic front. The DOW futures are in green, eking out some gains and currently indicate that the DOW could gain 22 points at the open. Crude oil eased from highs above $83 and currently trade at $82.54, down 12 cents on the day.