International Partners: Asia Pacific markets began the week in buoyant mood as investors speculated that the far worse-than-expected US nonfarm payrolls data for September would prompt the US Federal Reserve to push their timetable for raising interest rates out to 2016.

All key Asian indices – with the exception of China’s which were closed for a holiday – posted significant gains with Japan’s Nikkei 225, Hong Kong’s Hang Seng up by 1.5% and Australia’s ASX 200 up by 2%.

The US jobs data showed the economy created 142,000 jobs in September, far fewer than the 203,000 consensus estimates. August’s 173,000 was revised downwards to just 136,000 and July’s revised down to 223,000 from 245,000.

“We’re amused by suggestions that the slowdown in China is to blame for the disappointing jobs data,” said Clive Bernstein, European equities strategist at International Partners. “It’s far more to do with the ending of QE3 last year and the ineffectiveness of Fed policy but the net effect is the same; markets will enjoy a temporary rally followed by another selloff before the narrative moves away from interest rate hikes to how the Fed and other central banks can best arrest the decline in the global economic growth,” opined Bernstein.

The firm believes that emerging market equities are at or nearing their lows and is advising clients to consider positioning for a resurgence in both emerging market stocks and currencies as bets on a Fed rate hike wane.

“International Partners thinks we’re about to see a slow but clear reversal in the strong dollar narrative once investors realize that US interest rates aren’t going to rise any time soon,” said Bernstein.

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