Global Markets Rally as October Fed Rate Hike Odds Fade

Global stock markets rallied on Monday as the likelihood of a Federal Reserve rate hike in October diminished following weaker-than-expected US jobs data. The chance of an October rate increase fell below 20%, down from 64% just a week earlier, according to the CME FedWatch Tool. Traders still anticipate another rate hike in December, but the immediate easing of pressure boosted investor sentiment.

Japan's Nikkei index surged 2.5%, while MSCI's Asia-Pacific shares outside Japan climbed 0.9%. Nasdaq futures gained 0.17%, and EUROSTOXX 50 futures rose 0.3%. Despite the reduced rate hike expectations, the US dollar strengthened, supported by elevated Treasury yields and a weaker euro. The euro dropped 0.6% to $1.1185, its lowest level in 17 months, amid concerns over France's fiscal position.

Commodities saw declines, with Brent crude futures falling 0.7% to $101.52 per barrel and US crude dropping over 1% to $90.11. The declines were attributed to increased oil supplies from the Middle East and releases from G7 countries' stockpiles. Spot gold prices remained little changed at $4,143.82 an ounce.

The benchmark 10-year US Treasury yield eased slightly to 5.2579%, while two-year yields stood at 4.8059%. Bond yields across major economies remained near multi-year highs, driven by concerns over government finances, increased debt issuance, and elevated energy costs.