Market Update & Important Indicators
U.S. stocks advanced, as rising oil prices ignited gains in energy shares. Investors dialled back their expectations for an interest-rate increase this summer after data on Friday showed U.S. employers last month added the fewest jobs in more than five years. That marked a shift from recent weeks, when they had geared up for a rate rise following comments from Fed officials and minutes from the central bank's last meeting. Energy stocks led the S&P 500, rising 1.9% along with oil prices. Gold for August delivery closed up 0.4% at $1,247.40, after surging 2.5% on Friday. The broader S&P 500 has rallied more than 3% since May 19, which marked a recent low. With the advance, the S&P 500 is roughly 1% below its all-time closing high of 2130.82, which it hit in May 2015.
A slide by the U.S. dollar had a mixed effect in Asia on Monday: Mining stocks in Hong Kong rallied as iron ore and other dollar-priced commodities gained, while shares in Japan struggled from the prospect of a stronger yen. The Hang Seng Index rose 0.4%. The Nikkei Stock Average fell 0.4% and the Shanghai Composite Index fell 0.2%. What hit the dollar was Friday's surprisingly poor U.S. jobs report, which cast doubt on the possibility the Federal Reserve will raise interest rates in the next few months. The lower dollar prompted a 3.3% jump in iron-ore prices on Friday. In Japan, the yen rallied more than 2% against the dollar on Friday, although during Asian trading hours Monday it weakened to 107.570 Yen/$US.
A rally in Australian mining stocks on the back of a slump in the U.S. dollar helped drive the local equities market higher. The U.S. dollar remained depressed following significantly weaker-than-expected U.S. jobs data on Friday, which in turn buoyed prices for iron ore, copper and other commodities. It also lifted Australia's currency. Many analysts consider an increase in short-term interest rates at the U.S. Federal Reserve's June 14-15 meeting now off the table after nonfarm payrolls rose by 38,000 in May, the weakest performance since September 2010. Rising for a second session running, the S&P/ASX 200 ended the day up 41.5 points, or 0.8%, at 5360.4. The materials sector jumped 3.8%, the basket of energy shares was up 0.6% and the heavily weighted financials sector rose 0.3%.
Copper futures closed higher in tandem with other commodities. The London Metal Exchange's three-month copper contract was up 0.11% at $4,688 a ton around the PM kerb close. The other base metals were also higher. Aluminium was up 0.5% at $1,543 a ton; nickel was up 2% at $8,621 a ton; tin was up 2.2% at $16,960 a ton, lead was up 0.9% at $1,737 a ton, and zinc was up 1.7% at $2,024 a ton.
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