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Jun 6, 2016

Asian Markets at Close Report, by MarketWatch on June 6, 2016: Asian Shares Split on Back of U.S. Dollar Action

marketwatch.com
 
Chao Deng
A slide by the U.S. dollar had a mixed effect in Asia on Monday: Mining stocks in Australia and Hong Kong rallied as iron ore and other dollar-priced commodities gained, while shares in Japan struggled from the prospect of a stronger yen.

Australia’s S&P ASX 200 XJO, +0.78%  finished up 0.8% and the Hang Seng Index HSI, +0.40% up 0.4%. The Nikkei Stock Average NIK, -0.37% fell 0.4% and the Shanghai Composite Index fell 0.2%.
What hit the dollar was Friday’s surprisingly poor U.S. jobs report, which cast doubt on the possibility the Federal Reserve will raise interest rates in the next few months. U.S. employers added just 38,000 jobs in May, the lowest monthly number in more than five years.
The lower dollar prompted a 3.3% jump in iron-ore prices on Friday. Copper led gains in base metals in Asia trading Monday. Oil also rose in Asian trading hours, with the Brent crude benchmark LCOQ6, +1.81%  topping $50 a barrel. Prices had slipped Friday on signs of a pickup in U.S. drilling activity.
The commodities rally sent the materials-stocks subindexes up 1.4% in Hong Kong and 3.8% in Australia, and energy shares rose as well — up 0.6% in both markets.
Among Australian miners, BHP Billiton Ltd. BHP, +3.72%  , BHP, +3.92% BLT, +5.61%  and Rio Tinto Ltd. RIO, +3.86% RIO, +5.51% RIO, +2.76%  gained 3.7% and 3.9%, respectively.
In Japan, however, a stronger yen—which hurts the competitiveness of exporters—set back markets. The yen rallied more than 2% against the dollar on Friday, although during Asian trading hours Monday it was weakening by 0.6% to ¥107.14 to the dollar.
Dai-ichi Life Insurance Co. 8750, -3.57%  fell 3.6% to ¥1,336.5 ($12.55) and Sumitomo Mitsui Trust Holdings Inc. 8309, -2.79%  dropped 2.8% to ¥362.2, on expectations of a prolonged low-yield environment, which tends to hurt profit margins for insurers and banks.
“The disastrous U.S. nonfarm payrolls release on Friday has killed off any chance of a June rate hike by the Fed,” said Angus Nicholson, market strategist with brokerage IG. The futures market now puts the probability of a U.S. interest-rate increase at 4% for June and 31% for July, according to the Chicago Mercantile Exchange.
Read: Yellen speech may be attempt at damage control
Investors in Tokyo also rotated toward the safety of stocks driven by domestic demand: Juice maker Kagome Co. 2811, +3.93% was up 2.3% at ¥2,862, mayonnaise-maker Kewpie Corp. 2809, +2.50% was up 1.2% at ¥2,991 and snack-foods maker Calbee Inc. 2809, +2.50% was up 1.3% at ¥4,000.
Chinese shares SHCOMP, -0.16%   were roughly unchanged, in the run-up to the release of exports data on Wednesday. It is expected to show a 4.6% decline from a year earlier, extending April’s drop of 1.8%, according to a survey by The Wall Street Journal.
Earlier Monday, Chinese authorities guided the yuan stronger against the U.S. dollar via its daily “fix,” loosely tracking the dollar’s drop Friday. Monday marks the start of the annual U.S.-China Strategic Economic Dialogue, two days of talks in Beijing among officials of the two countries.
— Robb M. Stewart, Kosaku Narioka and Vera Sprothen contributed to this article.
Read: Poor May jobs report sows fresh doubt about economy