published Jun 2nd 2016, 8:07 pm, by Emma O’Brien

(Bloomberg) —
Asian equities tracked the U.S. rebound, rallying as the S&P 500 Index’s climb to a seven-month high bolstered optimism ahead of jobs data that’s likely to color speculation around Federal Reserve policy. Gold extended its slump.

Japanese shares drove gains in the region as the yen pulled back from its strongest level since mid-May amid uncertainty over the outlook for economic stimulus. Gold declined for the 12th time in 13 days, while American crude fluctuated around $49 a barrel as traders weighed OPEC’s failure to crack a deal on capping output along with another drop in U.S. stockpiles. Australian government bonds paced gains from Thursday in U.S. Treasuries and copper fell with nickel. Soybean futures were near a 23-month high.

Traders have entered June on a tentative footing, with the month playing host to a number of key events that may determine the outlook for financial markets for the rest of the year. The European Central Bank standing pat on monetary policy Thursday and disappointment with the meeting of major oil producers means the focus now shifts to the U.S. payrolls report on Friday, which could solidify or dash expectations for a Fed rate increase in the northern-hemisphere summer. Also on investors’ radars is Britain’s referendum on whether to remain in the European Union, which is due in three weeks.

“Investors are taking heart that U.S. stocks are at such high levels, and that should lead to a rebound,” Mitsuo Shimizu, an equity strategist at Japan Asia Securities Group in Tokyo, said by phone. “This OPEC meeting was unlike the previous ones and the selloff in oil prices has ended, that’s also giving us reason to be optimistic.”

Stocks

About 150 more stocks rose as fell on the MSCI Asia Pacific Index, which was little changed as of 10:04 a.m. Tokyo time, headed for a 0.1 percent drop in the week.

Japan’s Topix index added 0.3 percent, rallying from its lowest point since May 24 as the yen shied from building on its three-day advance. Equities in Tokyo have been pressured after Prime Minister Shinzo Abe failed to provide details of a fiscal stimulus package as he announced a delay to a sales-tax increase.

In Australia, the S&P/ASX 200 Index climbed 0.3 percent, trimming its first weekly drop since the start of April to 2.1 percent, still the worst developed-market performer in Asia this week. New Zealand’s S&P/NZX 50 Index gained 0.2 percent, on track for a weekly advance of 0.4 percent, while the Kospi index in Seoul shed 0.2 percent. Stocks in Singapore and Malaysia climbed at least 0.3 percent.

Futures on the S&P 500 were steady at 2,104 after the index climbed 0.3 percent last session to break 2,100 points, a level that has provided a cap to two rallies in the past eight months. It’s still 1.2 percent below the all-time high reached May 21, 2015. In Hong Kong, Hang Seng Index futures gained 0.1 percent in most recent trading, while contracts on the Hang Seng China Enterprises Index added 0.4 percent.

Ahead of the payrolls report, investors can expect a swathe of services-industry data from China, India and Japan to the euro area and the U.S. Japan also reports on workers’ earnings Friday, South Korea and Thailand update foreign reserves and Malaysia posts data on trade.

Commodities

West Texas Intermediate crude lost 0.2 percent to $49.07 a barrel after rising 0.3 percent last session. The third drop in U.S. crude inventories in four weeks tempered the impact of OPEC’s decision to stick to a policy of unfettered production, turning down a proposal to adopt a new ceiling on output. WTI is headed for its first weekly decline since the start of May, losing 0.5 percent.

While crude prices dipped briefly after Thursday’s meeting, there was little of the rancor that punctuated last December’s gathering. The more harmonious atmosphere meant the group was able to appoint a new secretary-general — Nigeria’s Mohammed Barkindo — something it hadn’t been able to agree on since 2012. Saudi Arabia was discussing ideas with fellow OPEC members including restoring an output target scrapped in December, according to delegates familiar with the situation. Iran resisted overtures from the Saudis to restore a production objective.

Gold for immediate delivery fell for a third straight day, declining 0.1 percent to $1,209.39 an ounce. Gold is on track for its fifth straight weekly retreat as the prospect of a Fed rate hike as soon as this month dogs the precious metal. Copper dropped a fourth day in London, down 0.1 percent for a 2 percent slump in the week.

Soybean futures was steady after jumping to the highest level in almost two years on Thursday amid forecasts for drier weather in the U.S. growing area.

Currencies

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, added 0.1 percent early Friday, all but erasing its drop in the week. The U.S. currency lost 0.1 percent to $1.1145 per euro, but gained 0.1 percent to 108.99 yen, reducing its decline this week to 1.2 percent, its first drop since the end of April.

Investors are paying close attention to U.S. data after Fed officials indicated a potential interest-rate hike as soon as this summer was contingent on continued improvement in the economy.

A report from the ADP Research Institute showed 173,000 workers were taken on in the U.S. in May, while filings for unemployment benefits declined for a third consecutive week, according to separate data. Economists predict nonfarm payrolls rose by 160,000 workers in May, matching the increase for April, while the jobless rate is expected to have fallen to 4.9 percent, from 5 percent.

“A nonfarm payrolls number at least in line with consensus expectations and solid average hourly earnings growth will likely be required to keep a June/July Fed hike in the markets’ sights and the dollar underpinned,” Kymberly Martin, a markets strategist in Wellington at Bank of New Zealand Ltd., said in a client note. “All eyes are on the payrolls report.”

–With assistance from Nobuyuki Akama. To contact the reporter on this story: Emma O’Brien in Wellington at eobrien6@bloomberg.net To contact the editors responsible for this story: Emma O’Brien at eobrien6@bloomberg.net Jeff Sutherland

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