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Asia stocks weigh weak China trade, increased prospects of US rate hike next month

BEIJING, China – Stocks in China and Japan rose Monday, taking in stride a possible U.S. interest rate hike next month after weak China trade suggested more stimulus is in store for the region’s biggest economy. Other markets were mixed.

KEEPING SCORE: The Shanghai Composite Index rose 2.2 per cent to 3,668.21. Japan’s Nikkei 225 was up 2 per cent at 19,642.74 as rate hike prospects propelled the dollar higher against the yen. Hong Kong’s Hang Seng was little changed at 22,856.47. Australia’s ASX/S&P 200 shed 1.8 per cent to 5,119.50 and South Korea’s Kospi retreated 0.8 per cent to 2,025.70. Stock benchmarks in Southeast Asia fell.

CHINESE TRADE: Chinese customs data showed imports fell by 18.8 per cent in October from a year earlier, damping hopes for a rebound this quarter from the country’s economic slowdown. Exports shrank 6.9 per cent in a sign of weak global demand. So far this year, total Chinese trade has declined 8.5 per cent compared with the first 10 months of last year. Weak demand from China is a negative for countries such as Australia and South Korea but also suggests Beijing will continue to provide stimulus to the economy to prevent it from slowing too sharply.

AMERICAN JOBS: An unexpectedly strong October jobs report fueled expectations the U.S. Federal Reserve will raise interest rates as early as next month after keeping them close to zero since the 2008 global crisis. The Labor Department said U.S. employers added 271,000 jobs, beating the most optimistic projections, while the unemployment rate dipped to a fresh seven-year low of 5 per cent, from 5.1 per cent. The market turmoil over the summer kept the Fed from raising rates at their September meeting.

ANALYST’S TAKE: With Federal Funds Rate futures for December implying a 69 per cent probability of a rate hike, “markets have not thrown a tantrum or gone into hysterics, yet,” said IG market strategist Evan Lucas in a report. Their orderly movements suggest markets “will take a small increase to the Fed funds rate in its stride. “

WALL STREET: The Dow Jones industrial average rose 46.90 points, or 0.3 per cent, to close at 17,910.33 on Friday. The Standard & Poor’s 500 fell less than a point to 2,099.20 and the Nasdaq composite rose 19.38 points, or 0.4 per cent, to close 5,147.12.

ENERGY: Benchmark U.S. crude gained 50 cents to $44.79 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged $1.09 on Friday to close at $44.29. Brent crude, a benchmark for international oils, added 52 cents to $47.94 in London. It fell 56 cents on Friday to close at $47.42.

CURRENCIES: The dollar rose to 123.26 yen from Friday’s 123.17. The euro gained to $1.0772 from $1.0742.