Japan stocks gain, Asian shares rise as Fed hike bets ease, oil gains
MSCI’s Asia Pacific equities index climbs 0.4%
ASIAN stocks rose after a softer US jobs data report eased pressure on the US Federal Reserve to keep raising interest rates. Brent crude rose as Yemen launched a bid to recapture Houthi-controlled areas.
MSCI’s Asia Pacific equities index rose 0.4 per cent, with Japanese shares rallying 2 per cent.
Among the main moves in markets, S&P 500 futures rose 0.1 per cent as at 9.06 am Tokyo time. The Hang Seng futures fell 0.2 per cent, Japan’s Topix rose 0.9 per cent and Australia’s S&P/ASX 200 rose 0.6 per cent.
Contracts for the Nasdaq 100 rose 0.3 per cent after the underlying gauge closed at a record high on Friday (Oct 2) and a US index of semiconductor shares rallied.
Brent for December delivery rose above US$103 a barrel early on Monday before paring gains after that contract gained almost 5 per cent last week.
Prices rallied even after major Opec+ nations agreed to keep oil production quotas unchanged in November.
Friday’s US jobs report showed employers added fewer workers in September than economists had forecast and wage growth slowed.
Bonds remained under pressure even with money markets now pricing in less than a 25 per cent chance of a Fed hike in October.
US non-farm payrolls increased 29,000 in September after a downwards revision to the prior two months. That missed all estimates in a Bloomberg survey of economists.
The unemployment rate rose to 4.2 per cent, partly reflecting a growing workforce.
“Not too hot, not too cold Goldilocks jobs data for September add to expectations that the Fed won’t rush into another rate hike (in October),” Shane Oliver, chief economist and head of investment strategy at AMP, wrote in a note.
Elsewhere, the Brazilian real edged higher as right-wing senator Flavio Bolsonaro surged to a surprise lead over incumbent Luiz Inacio Lula da Silva in the first round of Brazil’s presidential race.
Such a result, if confirmed in final counts, would position him as the favourite in a run-off later in October.
Gold was little changed after capping its biggest weekly loss since June as higher bond yields outweighed bets on a Fed rate hold.
While the underwhelming jobs report sparked a short-lived rally in Treasuries on Friday, the bond market is still in the grip of a months-long rout driven by worries about persistent inflation, government spending and surging corporate borrowing to finance the artificial intelligence buildout.
Benchmark US 10-year yields last week hit their highest level since 2002.
This week’s auctions of 10- and 30-year Treasuries will test investors’ demand for longer-maturity debt.
The Fed will also release minutes of its September meeting on Wednesday, which may reveal policymakers’ concerns about underlying price trends and expectations.
Investors are also on the alert for signs of contagion in Europe’s government bond market after a sell-off last week triggered memories of the region’s debt crisis 15 years ago.
“Global bond curves steepened over the past week, and the volatility we are seeing in fixed income yields is finally gaining attention in financial markets more broadly,” Mark Dowding, chief investment officer for fixed income at RBC BlueBay Asset Management, wrote in a note.
“Notwithstanding this, over the past several days, market fears for back-to-back central bank rate hikes have appeared to mitigate somewhat.” BLOOMBERG
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