TOKYO: Most Asian stocks fell, with Japanese exporters sliding as weak U.S. payrolls data sent the dollar plunging against the yen. Emerging markets rallied amid speculation the Federal Reserve will delay raising rates.
The MSCI Asia Pacific Index dropped 0.2 percent to 129.46 as of 11:31 a.m. in Tokyo, paring losses of as much as 0.5 percent earlier. The 38,000-worker increase in non-farm payrolls was less than the most pessimistic of forecasts in a Bloomberg survey of economists, damping an unsteady recovery in global equities and sending the yen surging the most in more than a month on Friday. The probability of the Fed raising benchmark rates by July slid to 27 percent after the jobs data, from more than 50 percent a week ago.
“The yen strength isn’t going to help Japan,” Tim Schroeders, a Melbourne-based portfolio manager at Pengana Capital Ltd., who helps oversee about $1.2 billion in assets, said by phone. “At the moment, whatever Japan is doing domestically in terms of policies is superseded by external machinations. Should the Fed delay raising rates, we may very well see further outperformance from these emerging markets versus developed markets.”
Japan’s Topix index dropped 1.2 percent as the yen traded at 106.79 to the dollar, after strengthening 2.2 percent on Friday. Japanese exporters slipped, with Honda Motor Co. and Sony Corp. dropping at least 1.1 percent. Banks slumped, with Mitsubishi UFJ Financial Group Inc. retreating 2.1 percent.
Japanese stocks have been battered this year as a global equity rout that began at the start of 2016 sent the yen higher, while the Bank of Japan’s efforts to boost stimulus by implementing negative rates hurt bank shares. Prime Minister Shinzo Abe last week said the country will delay a planned sales tax increase, which had been scheduled for next April, on concern consumption isn’t strong enough to handle a higher levy. Attention will turn to the BOJ’s policy meeting next week for signs on whether the central bank will add to stimulus to reach its 2 percent inflation goal.
The MSCI Emerging Markets Index climbed 0.5 percent, with equities in the Philippines, Indonesia and Malaysia pacing gains. The FTSE Bursa Malaysia KLCI index added 0.4 percent as the ringgit surged the most in two months.
“The weak U.S. jobs data gives emerging markets another day to live,” said Jonathan Ravelas, chief market strategist at BDO Unibank in Manila. “This could make investors more courageous to push markets higher.”
China’s Shanghai Composite Index was little changed. Singapore’s Straits Times Index gained 0.5 percent. Hong Kong’s Hang Seng Index fell 0.3 percent. Australia’s S&P/ASX 200 Index climbed 0.9 percent. Markets in South Korea and New Zealand are closed for a holiday.
Futures on the S&P 500 Index dropped 0.1 percent. The U.S. equity benchmark index slipped 0.3 percent on Friday after declining as much as 1 percent after the jobs report. The employment data come amid a high-stakes month for global markets, with anxiety over the U.K. potentially voting to exit the EU adding to concerns.
