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GLOBAL MARKETS-Asia's stock rally pause ahead of U.S. jobs data, euro at 1-1/2 month top

Published 05/06/2020, 12:50 pm
Updated 05/06/2020, 12:54 pm
© Reuters.
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* Asian stocks ease from multi-week peaks, valuations heady

* U.S. dollar slide continues

* Euro maintains strength

* U.S. unemployment report in view

By Swati Pandey

SYDNEY, June 5 (Reuters) - Asian stocks were poised for their biggest weekly rise in over eight years while the euro hovered near a 1-1/2 month high as Europe's central bank surprised with more stimulus, fuelling hopes for a global rebound.

The equities rally prompted investors to take winnings ahead of Friday's nonfarm payrolls data, which is expected to show further deterioration in the U.S. jobs market.

As a result, MSCI's broadest index of Asia-Pacific shares outside of Japan .MIAPJ0000PUS slipped 0.2% from a 12-week top with China's blue-chip index .CSI300 off 0.2%.

The MSCI ex-Japan index is up about 6.5% so far this week. If gains are sustained it would be its best weekly showing since late 2011.

Emerging market equities have also boasted solid gains this week with Philippines .PSI the star performer, having risen about 1,000 points, or 11.6%, a sign money was moving into riskier assets. market has gone up so far, so fast there's a lot of people saying, 'I'm going to take a little profit,'" said Jim Paulson, chief investment strategist at The Leuthold Group in Minneapolis.

Australia's benchmark index was down 0.3% .AXJO but still near its highest since mid-March while Japan's Nikkei .N225 fell 0.36%.

E-mini futures for the S&P 500 EScv1 rose 0.15%.

Overnight, the S&P 500 .SPX eased 0.34% and the Nasdaq Composite .IXIC lost 0.69%. The Dow .DJI bucked the trend and ended a shade higher.

Investors were a tad cautious at these heady levels with valuations at their highest since the dot.com boom in 2000, according to Matthew Sherwood, investment strategist for Perpetual.

Technical chart indicators suggest the market is at "over-bought" levels, Sherwood added, a signal that a correction is due.

World equity markets were thrashed in March when they hit "bear territory" on fears the COVID-19 driven lockdowns would push the global economy into a long and deep recession.

Market sentiment has since been bolstered by powerful central bank stimulus.

"Central banks have rightly stepped in to cushion the economic blow of COVID-19 and unquestionably succeeded in steadying the ship," said Bob Michele, chief investment officer and head of the global fixed income, currency & commodities group at J.P.Morgan Asset Management.

However, Michele warned the massive scale of quantitative easing would distort pricing and mute traditional signals from bond markets on growth and inflation, advocating "co-investing" alongside central banks.

Investor attention is now focused on Friday's U.S. employment report, which is expected to show nonfarm payrolls fell in May by 8 million jobs after a record 20.54 million plunge in April.

The U.S. unemployment rate is forecast to rocket to 19.8%, a post-World War Two record, from 14.7% in April. markets show continued confidence in the expected revival of the global economy.

The euro EUR= was last at $1.1329 after hitting a 12-week high of $1.1361 on Thursday after the European Central Bank (ECB) increased the size of its bond purchases by a larger-than-expected 600 billion euros. common currency is up 2% this week, on track for its third consecutive weekly gain.

All eyes will next be on the U.S. Federal Reserve, which holds its regular two-day policy meeting next week.

The U.S. dollar was last flat against the Japanese yen JPY= at 109.09, having risen 1.2% so far this week.

The dollar index, =USD which measures the greenback against a basket of major currencies, is poised for its third straight weekly loss.

The risk sensitive Australian dollar AUD= hovered near a five-month peak at $0.6941 and was on track for its third straight weekly rise.

In commodities, U.S. crude CLc1 slipped 28 cents to $37.13 per barrel and Brent LCOc1 eased 20 cents to $39.79. O/R

Spot gold XAU= was flat at $1,711 an ounce. GOL/

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