SYDNEY- Asian shares edged higher on Monday as a disappointing US payrolls report promised to keep policy there super-loose for longer, but also clouded the outlook for global growth and inflation.
A holiday in the United States made for thin conditions and kept MSCI’s broadest index of Asia-Pacific shares outside Japan to a small gain of 0.2 percent, though that was the highest since late July.
Japan’s Nikkei added 1.7 percent, extending a rally on hopes a new prime minister there would bring added fiscal stimulus.
Chinese blue chips gained 1.3 percent amid speculation Beijing would also be adding stimulus through fiscal and monetary policy.
Nasdaq futures were barely changed, while S&P 500 futures dipped 0.1 percent. EUROSTOXX 50 futures and FTSE futures were little moved.
Investors were still assessing the fallout from the September payrolls report, which showed a much smaller increase in jobs than expected, but also a pick up in wages.
The latter was enough to nudge longer-dated Treasury yields higher and steepen the yield curve, even as markets speculated the Federal Reserve might start tapering later.
“Employment decelerated sharply in August, with little indication of a pickup in labor supply,” said Barclays economist Jonathan Millar. “This puts the Fed in a quandary as it balances risks of a sharp demand slowdown against those of tight supply and inflation.”
“We still expect the Fed to signal tapering in September, but now expect it to begin in December not November. QE will likely end by the middle of 2022.”
The rise in US 10-year yields to 1.32 percent limited some of the pressure on the dollar from the poor payrolls print, though its index still touched a one-month low before steadying at 92.128.
