Asian Markets Rise on Easing Inflation Fears and Lower Fed Rate Hike Odds

Asian markets opened higher on Monday, kickstarting a week packed with key U.S. economic data releases. Investors have grown more optimistic as inflation concerns ease, reducing the likelihood of another Federal Reserve interest rate hike. Japan’s Nikkei 225 surged 2.5% in early trading, crossing 70,000 points for the first time in three months. Australia’s S&P/ASX 200 inched up 0.1%, while Hong Kong’s Hang Seng remained flat. Markets in Shanghai and South Korea were closed for national holidays.

Shares of artificial intelligence-related companies attracted significant buying interest. In Japan, Tokyo Electron rose 5.5% and SoftBank Group gained 3.3%. Taiwan Semiconductor Manufacturing Co. (TSMC) climbed 2.6%. Last week, U.S. stocks ended near all-time highs after a positive jobs report eased inflation fears. The S&P 500 gained 0.7%, the Dow Jones added 0.5%, and the Nasdaq composite rose 1.2%.

The U.S. government reported that employers added 29,000 more jobs than expected last month, though this was a slowdown from August’s net hiring rate of 133,000. Markets interpreted this as lowering the chances of an October rate hike by the Federal Reserve. The central bank recently raised its main interest rate for the first time in three years to combat rising living costs. The pullback in rate hike expectations helped stabilize the bond market, with the 10-year Treasury yield briefly dipping below 5.17% before rebounding to 5.28%.

In energy trading, U.S. crude oil fell 1.03% to $90.17 a barrel, while Brent crude dropped 0.58% to $101.66. Oil prices have been volatile due to uncertainty over how the war with Iran will impact global oil markets. In currency trading, the U.S. dollar strengthened to 157.97 Japanese yen, while the euro declined to $1.1179.