Asian markets experienced rising shares as the week began. The dollar finally lifted itself from the lowest levels it had been going through in nearly a month following US nonfarm payrolls experiencing the most sluggish job growth in over five years. This obviously blew away any expectations for a US interest rate hike in the near-term.
The .MIAPJ0000PUS, the broadest Asia-Pacific shares index of MSCI outside Japan, rose 0.6%. Wall Street was down last week. The S&P 500 .SPX finished within 1.5% of its record closing high. The Nikkei slipped down by 1.1% following the soaring of the yen against the dollar.
US nonfarm payrolls rose only by 38,000 in May 2016, which is the smallest rise since September 2010. It was well short of 164,000-rise expectations. According to a poll of the top banks in Wall Street conducted by Reuters after the figures of jobs, they all expect interest rates to be left unchanged by the US Federal Reserve at its policy meeting on June 14-15.
Data has revealed that the non-manufacturing sector in the US has also disappointed, with a decline in the May headline index from 55.7 in April to 52.9. Fed funds futures rates have indicated that traders now only expect a 6% chance of a Fed hike in May, which is a drop from the 21% chance they expected a few days earlier.
If the Federal Reserve indicates a possibility of interest rate hike, the dollar could be saved from falling further and impacting the stock market in a greater manner.
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