More rate cuts would be needed to avert a potential recession in the world’s biggest economy
Asian shares edged higher on Monday after data showed the US unemployment rate dropped to the lowest in almost 50 years, easing concerns of a slowdown in the world's largest economy.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.25%. Japan's Nikkei stock index .N225 rose 0.29%, while Australian shares were up 0.48%
US Treasury yields inched higher as Friday's data on the US jobs market suggests the Federal Reserve may not need to cut interest rates further.
Sentiment toward the US economy deteriorated sharply last week after disappointing data on manufacturing and services suggested the trade war was taking a toll, and more rate cuts would be needed to avert a potential recession in the world's biggest economy.
The modest increase in US jobs has eased some of these concerns, but traders warn that downside risks loom large on the horizon. The US unemployment rate fell to 3.5% in September to reach the lowest since December 1969. Non-farm payrolls also grew in September, but slightly less than expected.
The focus will shift to the next round of US-China trade negotiations expected in Washington on Oct. 10-11 to see if the two sides can end a bruising year-long trade war that has hurt global growth and raised the risk of recession.
"Moderate job growth and subdued inflation in the United States is a positive for stocks," said Shusuke Yamada, head of FX and Japan equity strategy at Merrill Lynch Japan Securities in Tokyo.
"However, the dollar is a little soft heading into US-China trade talks. I see some scope for yen gains, but it is not likely to be a big move higher."
US stock futures, ESc1 fell 0.35% in Asia on Monday after the S&P 500 .SPX ended 1.4% higher on Friday.
In currency markets, the yen gained slightly and the yuan slipped after Bloomberg reported that Chinese officials are signaling they are increasingly reluctant to agree to a broad trade deal pursued by US President Donald Trump.
The yuan weakened about 0.20% in offshore trade to 7.1285 yuan per dollar CNH=. There is no onshore trading as Monday is the last day of China's holiday break.
The United States and China have slapped tariffs on each other's goods as part of a long-running dispute over Beijing's trading practices, which Washington says are unfair.
Central banks around the world have been easing policy to offset the negative impact from the trade war.
The Fed has already lowered interest rates twice this year, but a strong jobs market suggests further rate cuts may not be necessary.
The yield on benchmark 10-year Treasury notes US10YT=RR rose to 1.5187% compared with its US close of 1.5140% on Friday.
Worries about political instability in Hong Kong could hurt market sentiment after China's army took the unusual step of issuing warnings to anti-government protesters in Hong Kong over the weekend.
Four months of often violent protests against Chinese rule has pushed the former British colony to the brink of recession and posed a serious challenge to Beijing's control of the city.
Spot gold XAU=, an asset that is often bought during times of uncertainty as a safe-haven, rose 0.26% to $1,508.19 per ounce.
The yen JPY=EBS, also considered a safe-haven asset edged slightly higher to 106.78 versus the US dollar and gained to 72.20 per Australian dollar AUDJPY=.
US crude CLc1 dipped 0.34% to $52.63 a barrel as worries about oversupply regularly weigh on oil futures prices.