* Shanghai stocks hit 14-month high in service sector recovery
* US payrolls jump 4.8 million, but obstacles remain ahead
* Increased US COVID-19 cases threaten US recovery
* Asian Stock Markets: tmsnrt.rs/2zpUAr4
By Hideyuki Sano and Imani Moise
TOKYO / NEW YORK, July 3 (Reuters) – Asian stocks climbed to a four-month high on Friday due to strong US payroll data and a rapid pickup in activity in the Chinese service sector, but an increase in coronavirus cases in the United States kept control more risk-taking.
MSCI’s broader Asia-Pacific index of stocks outside Japan increased 0.5%, reaching its highest level since late February, while Japan’s Nikkei rose 0.4%.
Mainland Chinese stocks, which were among the best-performing in the past month, boosted their gains, with the Shanghai Composite Index reaching a peak last seen in April 2019.
China’s service sector expanded at the fastest pace in more than a decade in June, the Caixin / Markit Service Purchasing Managers Index (PMI) showed as the decline in coronavirus-related blocking measures. reviewed consumer demand.
“The recovery in China’s domestic demand is accelerating, even though external demand remains weak. Therefore, investors are shifting to sectors geared towards domestic demand, “said Wang Shenshen, senior strategist at Mizuho Securities in Tokyo.
S&P 500 futures fell 0.1%, but volumes were lower than usual due to a holiday in the U.S. markets on Independence Day Friday.
The country’s non-farm payrolls increased by 4.8 million jobs in June, above the average forecast of 3 million jobs in June, thanks to increases in the affected hotel sectors.
But economists noted that there were warnings in the optimistic headline numbers.
Even after two months of job recovery beginning in May, the US economy has recovered only a third of a historic decline of $ 20,787 million in April.
A separate report on unemployment claims, the most timely information on employment, showed that initial claims for state unemployment benefits fell just 55,000 to 1,427 million seasonally adjusted for the week ending June 27. The number of people who received benefits after an initial week of aid increased from 59,000 to 19,290 million in the week ending June 20.
The momentum of the recovery faces more headwinds, as a wave of new coronavirus infections prompts US states to delay and, in some cases, reverse plans to allow stores to reopen and activities resume.
More than three dozen US states reported increases in COVID-19 cases, and cases in Florida increased above 10,000.
On the other hand, unemployment benefits expanded to support those who lost their jobs due to the pandemic will expire later this month, although many investors believe Congress could extend the measure.
“Going back to the pre-pandemic (job levels), in my opinion, will be a matter of years,” said Danielle DiMartino Booth, CEO and chief strategist at Quill Intelligence in Dallas, TX. “Hopefully it will be two years, but he is likely to be optimistic given the number of permanent closings we have learned.”
Sino-American diplomatic tensions have also cast a shadow.
The US State Department warned top American companies, including Walmart, Apple and Amazon.com Inc, about the risks facing the maintenance of supply chains associated with human rights abuses in the province western china from Xinjiang.
“China will maintain a hardline stance towards next year when the Chinese Communist Party celebrates its 100th anniversary since its founding,” said Akira Takei, bond fund manager at Asset Management One.
“Global companies can no longer have supply chains in China as they used to.”
In currencies, the major currencies changed little, with the euro at $ 1.1245 and the yen changing hands at 107.52 per dollar.
Oil prices declined due to concerns about the resurgence of the coronavirus globally and in the United States, the world’s largest consumer of oil.
Brent crude fell 0.65% to $ 42.86 per barrel, while US crude fell 0.66% to $ 40.38 per barrel. (Edition by Sam Holmes)
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