In This Article:
* Weak U.S. payrolls data bolster Fed rate cut expectations
* U.S. money market futures price in 2 rate cuts this year
* Yuan falls to lows last seen in late 2018
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Hideyuki Sano
TOKYO, June 10 (Reuters) - U.S. stock futures and Asian shares rose on Monday after the United States dropped its threat to impose tariffs on Mexico in a deal to combat illegal migration from Central America, and as weak U.S. jobs data raised hopes for U.S. interest rate cuts.
The Mexican peso jumped about 2.0% in early Monday trade to 19.2285 on the dollar on news of the deal, while the Chinese yuan slipped to its lowest levels this year on weak Chinese imports data and as talks to end the Sino-U.S. dispute remained deadlocked.
S&P500 mini futures rose as much as 0.8% and was last up 0.4%. The 10-year U.S. Treasuries yield jumped back 3.5 basis points to 2.119 percent, after hitting a 21-month low of 2.053 percent on Friday on soft U.S. jobs data.
Global investors had feared that opening up another trade conflict, while still battling with China, could tip the United States and other economies into recession.
Tokyo's Nikkei gained 1.1% while MSCI's index of Asia-Pacific shares outside Japan rose 0.7%, led by strong gains in Hong Kong and Indonesia.
The improved risk sentiment also helped lift the dollar against the yen 0.15% to 108.38 yen.
"The deal with Mexico is boosting sentiment while expectations of U.S. rate cuts will be also supporting share prices," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.
"Still, with limited progress seen so far in U.S-China trade talks, the most important issue for markets, stock prices will be able to rise only so much," he added.
That cautionary note was driven home by Chinese data on Monday morning showing imports contracted 8.5% in May from a year-earlier, a much worse than expected outcome that signalled weak domestic consumption.
Exports, however, unexpectedly rose 1.1% last month, though many suspect the uptick is linked to front-loading of shipments by firms to avoid higher U.S. tariffs.
The yuan extended its losses after the data, while expectations the Fed will cut rates kept the dollar on the defensive after a weak jobs report from the U.S. Labor Department.
Nonfarm payrolls increased by 75,000 jobs last month, much smaller than the 185,000 additions estimated by economists in a Reuters poll.
Wage growth, closely watched for its impact on inflation, cooled to 3.1 percent from a year earlier, the slowest annual increase since September. Just three months earlier, wages had been rising at their fastest rate in a decade.