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Australian equities bolster Asian markets on strong jobs report

Wednesday 03.00 BST

What you need to know

  • Australian dollar up as much as 0.5 per cent after employment data
  • Yen hovers below ¥112 ahead of Bank of Japan rates decision
  • Australian banks continue rally on softer capital requirements
  • Oil rally loses steam with Brent still below $50 a barrel

Overview

The Australian dollar continued its ascent as equities Down Under climbed and the yen held steady ahead of the Bank of Japan’s interest rates decision on Thursday.

Hot topic

The Australian dollar was pushing toward the $0.80 mark following data that showed the national unemployment rate remained unchanged in June at 5.6 per cent. The currency rose as much as 0.5 per cent on the day to $0.7989.

Kate Hickie, Australia and New Zealand economist at Capital Economics, said it was “particularly encouraging that the recent run of decent full-time job creation continued in June with 62,000 full-time jobs created”, adding: “All told, there is clearly plenty of momentum in the labour market.”

Yield on Australia’s 10-year government bond was up as much as 6 basis points at 2.779 per cent, the highest in four months following the release of employment data.

Australian equities were undaunted by the currency’s climb as the S&P/ASX 200 index rose 0.4 per cent. Bank stocks were up 1.4 per cent as sentiment on the sector continued to improve following Wednesday’s news that incoming capital requirements would be less stringent than expected.

Equities

Tokyo’s Topix climbed 0.6 per cent as IT stocks notched a 0.9 per cent rise. Electronics manufacturer TDK rose as much as 5.8 per cent to ¥8,070 after UBS raised its target price for the company on Wednesday to ¥9,600.

In Hong Kong, the Hang Seng index was up 0.3 per cent, with coal-based energy company China Shenhua Energy rising 1.9 per cent as demand for power in China bolstered the country’s coal miners. Thursday’s gains brought its shares to HK$19.02, their highest in more than three and a half years.

Forex

The yen was trading flat below the ¥112 per dollar mark ahead of the Bank of Japan’s interest rates decision at ¥111.93. The BoJ is widely expected to hold rates steady and continue asset purchases at their current pace.

China’s renminbi weakened to Rmb6.7641 per greenback after the People’s Bank of China set the midpoint for its dollar trading band virtually flat at Rmb6.7464. The currency had closed onshore trading in China on Wednesday just above the Rmb6.75 mark.

The dollar index was up 0.1 per cent at 94.837, while yield on 10-year US Treasuries was flat at 2.268 per cent.

Commodities

A late rally for oil prices during the previous session showed little sign of regaining steam in Asia trading on Thursday. Brent crude, the global benchmark, was still hovering below the $50 dollar mark at $49.67. US marker West Texas Intermediate was flat at $47.11.

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