SYDNEY, Oct 5 (Reuters) – Asian shares rebounded from
11-month lows on Thursday as a plunge in oil prices and softer
U.S. labour data helped pull Treasury yields off 16-year peaks,
although a looming U.S. payrolls report could make or break the
rally.
Tracking overnight gains on Wall Street, MSCI’s broadest
index of Asia-Pacific shares outside Japan rose
0.6%. Japan’s Nikkei climbed 1.2%.
Hong Kong’s Hang Seng index advanced 0.3%. China’s
mainland markets remain closed for holidays.
Overnight, the rout in Treasuries took a breather after a
cooler-than-expected U.S. private payrolls report and a 5% drop
in oil prices offered some comfort to investors. Risk sentiment
has taken a beating on the view that interest rates will stay
high for longer.
Ten-year yields eased 2 basis points to 4.7163%
on Thursday, continuing their overnight retreat from a fresh
16-year high of 4.8840%.
Much will depend on U.S. non-farm payrolls data on Friday.
Economists expect 170,000 jobs created in September, slowing
from 187,000 in August, while the jobless rate likely ticked
lower to 3.7% from 3.8%.
“I think those numbers will have to be a long way from those
expectations for it to move the dial for the Fed, but numbers
close to the expectations might serve to calm jitters in the
Treasury market,” said Stephen Miller, an investment strategist
at GSFM, a Sydney-based fund.
“Given where Treasury yields are at the moment, I think the
risks are pretty evenly balanced between them on the downside
and on the upside.”
The recent spike in yields has meant they have reached
levels where, if sustained, would see a significant tightening
in financial conditions, bolstering the case for no further
hikes from the Fed. The CME FedTool now prices in a 23% chance
of a hike in November, compared with 28% a day ago.
The U.S. dollar came off highs and Wall Street rebounded,
led by the tech heavy Nasdaq which rose more than 1%
overnight.
The battered yen also got a much needed reprieve,
rallying 0.5% on Thursday to 148.34 per dollar. Traders are
continuing to wonder whether a sharp rebound away from the 150
level on Tuesday was due to intervention from Japanese
authorities.
“Whether or not the BoJ intervened, we still judge the risk
of intervention is high while USD/JPY follows U.S. Treasury
yields higher,” said Joseph Capurso, head of international
economics at CBA.
Despite the renewed strength for the U.S. dollar, analysts
still see weakness for it ahead, a Reuters poll showed.
Oil prices gained on Thursday after losing a colossal 5% to
where they were at the beginning of the year. Brent crude
futures rose 0.3% to $86.10 per barrel and U.S. West
Texas Intermediate crude futures were also up 0.3% at
$84.45.
The price of gold gained 0.3% to $1,826.69 per ounce.
(Reporting by Stella Qiu; Editing by Edwina Gibbs)
