Asia stocks were higher across the board as the region took its first opportunity to react to Friday’s rally on Wall St and jobs data from US where NFP smashed expectations, but wage growth slowed which in turn provided a goldilocks backdrop for stocks. ASX 200 (+0.6%) was led by commodity names after crude rallied over 3% on Friday and PM Turnbull confirmed Australia is to be exempted from US tariffs. Nikkei 225 (+1.6%) outperformed but closed off its best levels as the cronyism scandal continued to haunt PM Abe after Japan’s Finance Ministry confirmed documents had been doctored in a land-sale to a school operator which allegedly used ties to PM Abe’s wife to get a cheap deal on state-owned land. Elsewhere, Hang Seng (+1.5%) and Shanghai Comp. (+0.7%) also gained although the mainland got off to a slow start as US-China trade war concerns somewhat lingered and as participants also mulled over Xi’s power consolidation after China’s legislature voted to formally scrap presidential term limits from its constitution. Finally, 10yr JGBs are flat with demand constrained amid the heightened appetite for risk, while the BoJ were also in the market but kept its Rinban amounts unchanged from the prior.
In FX markets, the USD was subdued in which the DXY just about held above the 90.00 level following last Friday’s jobs data as the weaker wage growth eased concerns of rising inflation. Elsewhere, USD/JPY and JPY-crosses were choppy with initial support seen amid the heightened risk-appetite, although upside was later pared as the land-sale scandal led to calls for Finance Minister Aso to resign and threatened PM Abe’s approval ratings which could also dampen his prospects to head the LDP for a third term. Elsewhere, antipodeans were underpinned with AUD lifted by recent gains in crude and Australia’s exemption from Trump tariffs, while NZD/USD led the advances after it reclaimed the 0.7300 handle.