Shares get a lift in Asia as lower US rates are baked in

Share markets found some much needed support in Asia on Monday as the heightened prospect of lower borrowing costs helped soothe concerns about the US economy, though the long-term credibility of US policy remained in doubt.

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A buy-the-dip mentality led to a bounce in Wall Street and European stock futures, and allowed the dollar to stabilize after Friday’s US payrolls-induced retreat.

Treasuries ran into some profit taking after their huge gains, but fund futures still imply an 85% chance the US Federal Reserve will cut rates in September and ease by 100 basis points or more by this time next year.

The prospect of a shift in rates was the only silver lining to a dire payrolls report in which downward revisions left the three-month average of job growth at 35,000 from 231,000 at the start of the year.

“The report brings payroll growth closer in line with big data indicators of job gains and the broader growth dataset, both of which have slowed significantly in recent months,” said analysts at Goldman Sachs.