Asian shares edged higher on Monday, consolidating recent rises as late gains in Wall Street on Friday and a rebound in the commodities complex prompted some investors to hunt for bargains while the dollar struggled.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.1 percent in early deals, rounding off impressive 10 percent gains so far this month as investors unwound some of their long U.S. dollar and short commodities and emerging markets trade.
In a sign that the sentiment towards emerging markets may have turned a corner, the much-tracked Bank of America Merrill Lynch fund flow report showed that weekly outflows from emerging market funds were at their lowest since July.
"The staunching of EM equity outflows illustrates that weak U.S. payroll/dollar-weakness was the best news for EM/commodities/resources complex," the report said.
The widely-tracked VIX index .VIX, a volatility gauge of investor nervousness, was at its lowest since late August, a sign that optimism was returning to the markets after a tumultuous summer in which major indexes lost more than a quarter of their value.
On Wall Street, major indexes .DJI .SPX closed slightly higher on Friday, rounding off impressive gains for the week. S&P 500 e-mini futures ESc1 were slightly lower in Asian trading on Monday.
Australia and Korea .KS11 were flat to slightly lower. Japan is shut for a holiday.
An unexpectedly weak U.S. jobs report for September had led many investors to speculate that the Fed will not deliver its first hike since 2006 until 2016.
In currency markets, the dollar struggled against a basket of currencies .DXY on growing concern the Fed may not raise rates until next year triggering some unwinding of positions.
Strategists at Brown Brothers Harriman warned that technical levels warned of scope for additional dollar losses in the coming sessions. The index was trading below 95, its lowest levels in a month, according to Thomson Reuters data.
The euro was up about 0.1 percent at $1.13690 EUR=, consolidating recent gains, while the Japanese yen JPY= held within recent broad trading ranges carved against the greenback.
In commodities, oil prices rose in early Asian trading on Monday after U.S. drillers cut oil rigs for six straight weeks, while traders awaited Chinese trade data to be published following the one-week National Holiday. [O/R]
U.S. West Texas Intermediate crude futures CLc1 were trading at $49.79 per barrel, up 16 cents from their last settlement. Internationally traded Brent futures LCOc1 were up 11 cents at $52.76 a barrel.
Industrial metals such as copper and zinc got some much needed respite, posting impressive gains last week.