Stocks in Asia rose on Monday after U.S. jobs data released late last week showed an unexpected recovery in employment data. The Labor Department said the economy added 2.5 million jobs in May versus -8 million expected while the unemployment rate fell to 13.3%. The extension of oil production cuts by OPEC on Sunday added to investor optimism as well. Overall, the MSCI Asia ex-Japan index rose about 0.3%. Markets in Australia were closed on Monday for a holiday.
Following a decent rally seen last week, European equities opened lower as the report showed German factory output suffered the steepest decline on record in April. German production output slid 17.9% month-on-month in April, worse than the 16% expected. Meanwhile, Eurozone June Sentix investor confidence came in at -24.8 versus -22.0 expected. On the positive side, it is reported that German Chancellor Angela Merkel’s cabinet is considering holding a special meeting on Friday. The authorities plan to discuss the implementation of large parts of the recently announced EUR130 billion stimulus packages.
Meanwhile, the dollar is marginally lower against major counterparts but in a wider picture, most currency pairs are little changed at the start of the week. EURUSD dipped to intraday lows around 1.1280 earlier in the day but bounced afterwards, clinging to the 1.13 handle. Of note, the euro managed to avoid a deeper retreat despite dismal economic data out of the Eurozone and the worsening risk sentiment in general. Later this week, the pair may be affected by the Federal Reserve’s monetary policy decision due on Wednesday.
Elsewhere, Brent crude rallied to fresh three-month highs around $43.30 early in the day but attracted some profit-taking and retreated marginally, struggling to regain the $43 handle. In general, sentiment in the oil market looks upbeat after the OPEC+ countries agreed on Sunday to extend production cuts at the current level through end-July. In the short term, the outlook for oil prices will depend on risk sentiment.