Asian stocks followed on from where US stocks left off on Friday, posting sizeable gains on the back of encouraging US jobs data and renewed optimism over Europe.
Asian trading overnight saw Hong Kong’s Hang Seng Index gain 2.01%, Australia’s S&P/ASX200 rise 1.32%, whilst Japan’s Nikkei 225 Index advanced today the most since June, increasing 2.02%. as Asian stocks played catch up with their U.S. counterparts, rising on news that the U.S. economy added a net 163,000 net nonfarm payrolls in July, above market expectations for a gain of 100,000 higher than June’s revised figure of 64,000.
Despite the increase in jobs, many US households, lost jobs at the same time, keeping sentiment alive the U.S. that the Federal Reserve will intervene and stimulate the economy via monetary easing tools such as bond buybacks from banks. Such measures weaken the dollar and send stocks rising globally. Federal Reserve Chairman Ben Bernanke will speak in public later Monday, with markets hoping that he will shed more light on a need for Fed intervention.
Fed Chairman Ben Bernanke isn’t the only central bank chief said to be planning to loosen monetary policy. The Bank of Japan starts a monetary policy meeting over the next few days, and hopes have started to mount among that the Japanese central bank will take steps to weaken the yen.
In Europe, troubled Greece pledged over the weekend to meet austerity demands in exchange for funding from a 130 billion EUR bailout facility arranged earlier this year. Elsewhere in Europe, expectations are growing that the European Central Bank is drawing nearer to reactivating its policy of buying sovereign debt in order to push yields down in Spain and Italy. ECB President Mario Draghi indicated last week that such a move was possible which resulted in European stocks jumping and further fueled the risk-on trading session on Friday which has continued so far on Monday.