Most Asian stocks are in the red zone on Monday (09/05) and Indonesia's benchmark Jakarta Composite Index is leading declines. At the end of the first trading session Indonesian shares were down 1.15 percent at 4,767.32 points. Important issues that influence the performance of Asian stock markets are China's April trade data and US April jobs data. Meanwhile, crude oil prices continued to rally and the yen finally weakened against the US dollar (hence supporting Japanese stocks).
The latest macroeconomic data from the United States were mixed. In April 2016 only 160,000 jobs were added to the US economy; below expectations that averaged 200,000 and therefore it may take a long time before the Federal Reserve will decide to implement another interest rate hike. Although this is positive for the riskier (and higher yielding) emerging market assets (as it should cause a flow of additional funds into these assets), weaker-than-estimated economic growth in the world's top economy will also drag down global growth.
US jobs data also showed some positive signs: unemployment remained steady at 5 percent, while wage growth accelerated 0.3 percent (m/m) in April.
Meanwhile, Chinese stocks fell to 8-month lows as investors are concerned that the economic slowdown of the world's second-largest economy will persist after the latest trade data (released on Sunday) informed that China's imports and exports fell more than expected, signalling weak domestic and foreign economic activity. China's exports declined 1.8 percent (y/y) in April 2016, while imports plunged 10.9 percent (y/y) over the same period.
Furthermore, it is being speculated that Chinese authorities will not use excessive measures to stimulate growth, while authorities may also be planning another crackdown on speculation. Lastly, the recovery of China's economic growth that occurred in the first quarter of 2016 was mainly driven by (short-lived) investment, while the structural problems persist. This also depressed sentiments on today's trading day. On Monday, China's Shanghai Composite Index plunged 2.78 percent.
Meanwhile, oil prices surged - rallying for a fourth day - as wildfires in Canada are estimated to cause a one-million-barrels-a-day cut in the global oil supply. The price of West Texas Intermediate oil (June delivery) rose 75 cents to USD $45.41 per barrel, while North Sea Brent climbed 51 cents to USD $45.77 a barrel. Investors also digested the news that oil giant Saudi Arabia replaced oil minister Ali al-Naimi (after two decades) and replaced him by Khaled al-Falih, a close ally of the deputy crown prince (Prince Mohammed bin Salman). Khaled al-Falih previously stated that he will only support an oil production freeze provided Iran joins this freeze.
Japanese stocks bucked the trend on the back of a weaker yen. The US dollar weakened on expectation that further monetary tightening in the USA may take a while. The Nikkei 225 index rose 0.68 percent on Monday. A weaker yen is positive for export-oriented Japanese shares.
Indonesia's rupiah weakened to a five-week low after the nation's economic growth in Q1-2016 was disappointing at 4.92 percent (y/y). Indonesian markets had been closed since Thursday due to public holidays.
Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.29 percent to IDR 13,284 per US dollar on Monday (09/05).