Written by Kevin Buckland
TOKYO (Reuters) – Asian stocks rallied on Monday and the dollar weakened against the yen after a big U.S. jobs report dispelled fears of a recession and sharply lowered hopes for interest rate cuts. It hit a new high for the first time in seven weeks.
Short-term U.S. Treasury yields rose after Friday’s closely watched non-farm jobs report showed economic growth in September unexpectedly added the most jobs in six months.
Oil prices fell from a one-month high even as Israel bombed targets in Lebanon and the Gaza Strip, and Monday marked one year since the Hamas attack that triggered the war.
Japan’s Nikkei Stock Average rose 2% as of 0015 GMT, led by regional stocks, with further momentum from the weaker yen.
Australia’s stock benchmark rose 0.12%, while South Korea’s Kospi rose 0.29%.
Hong Kong’s Hang Seng Market is not yet open, and mainland Chinese stocks will remain closed until Tuesday due to the Golden Week holiday.
MSCI’s broadest index of Asia-Pacific shares rose 0.4%.
US Dow futures rose 0.08% after the cash index closed at an all-time high following Friday’s jobs report.
“The market reaction tells market participants what the important themes and risks are at this moment,” said Kyle Rodda, senior financial markets analyst at Capital.com. “The impact on future earnings.”
“It appears that America’s economic exceptionalism trade is also making a comeback.”
The US dollar rose to 149.10 yen for the first time since August 16, and was up 0.18% at 148.87 yen in the last session.
Japan’s top currency diplomat, Jun Mimura, said on Monday that authorities would monitor currency movements, including speculative trading.
The euro fell 0.07% to $1.0971, retreating toward Friday’s seven-week low of $1.09515.
Expectations for a massive 50 basis point (bp) rate cut in the Federal Reserve’s next policy announcement on Nov. 7, which had risen above 50% a week ago, have increased following the jobs report. completely disappeared.
According to CME Group’s FedWatch tool, traders now say there is a 95% chance of a quarter-point rate cut, and that rates are unlikely to remain unchanged.
The yield on the two-year U.S. Treasury rose 1.7 basis points to 3.9488% on Monday, its highest level in more than a month.
Gold fell 0.1% to $2,649.29 an ounce, but remained not far from last month’s all-time high of $2,685.42.
Oil prices fell after posting their biggest weekly gain in more than a year as the threat of regional war in the Middle East grew.
Brent crude oil futures fell 65 cents to $77.40 per barrel, and U.S. West Texas Intermediate crude futures fell 53 cents to $73.85 per barrel. (This article has been amended to correct the price of gold in Section 17)
(Reporting by Kevin Buckland; Editing by Jamie Freed)
