Asian stocks rose on Monday while the US dollar weakened as softer-than-expected US jobs data reduced expectations of another Federal Reserve rate hike this month.
Japan’s Nikkei rose 2 per cent in early trade, while Australian stocks added 0.5 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.15 per cent.
Investors are now pricing in a 22 per cent chance of a Fed rate hike this month, down sharply from 64 per cent a week earlier, according to the CME FedWatch tool.
US job growth slowed more than expected in September, while payrolls for the previous two months were revised sharply lower, further reducing expectations of an October rate increase.
“Labour conditions are stable overall, but Friday’s downward revisions signal that the US economy has lost jobs in two out of the nine months year to date, and the risk of further employment losses means that the Fed can’t hike another 100 basis points from here, which is what the curve is pricing in,” said Jose Torres, senior economist at Interactive Brokers.
US Treasury yields also eased, with the benchmark 10-year yield at 5.2643 per cent and the two-year yield at 4.8143 per cent.
The dollar slipped against major currencies, with the euro recovering to US$1.1243 from a 17-month low while sterling edged higher to US$1.3241. The greenback was also slightly lower against the yen at 157.81.
“Tighter policy elsewhere and a growing case for an October Fed pause are US dollar headwinds. But US growth outperformance and strong foreign appetite for US securities keep US dollar risks skewed to the upside,” said Elias Haddad, global head of markets strategy at BBH.
Meanwhile, Brent crude was little changed at US$102.20 a barrel while US crude stood at US$90.75. Spot gold rose 0.3 per cent to US$4,154.32 an ounce.
Nasdaq futures rose 0.3 per cent, S&P 500 futures gained 0.1 per cent, EUROSTOXX 50 futures added 0.3 per cent and FTSE futures climbed 0.4 per cent.
Reuters
