Stocks surge as weak US jobs data eases rate hike fears

Global stock markets surged on Monday following a significant shortfall in US job creation, which reduced pressure on the Federal Reserve to raise interest rates this month. The latest non-farm payrolls report revealed that the US economy added only 29,000 jobs in September, far below the anticipated 90,000. Additionally, job growth figures for July and August were revised downward, with July actually showing job losses. This data shifted market expectations, with the probability of a Fed rate hike this month dropping to just over 20%, down from over 65% earlier in the week.

Investors welcomed the news, particularly in Asia, where major indexes followed Wall Street's lead. Tokyo's Nikkei 225 jumped more than 2% to briefly surpass 70,000 points for the first time since July, while Taipei also saw a similar rise. Hong Kong, Sydney, Singapore, and other key markets advanced, though London edged up slightly, while Frankfurt and Paris dipped. The positive sentiment was further boosted by a decline in oil prices, which eased inflation concerns.

Analysts noted that the recent hiring trend has settled into a 'Goldilocks' zone of roughly 40,000 to 60,000 jobs per month, suggesting a balanced labor market. Core PCE, the Fed's preferred inflation gauge, remains at 3% year-over-year but has cooled in the short term. This combination of factors led some to believe that the Fed may hold off on a rate hike in October but could still consider one in December.

Additionally, G7 leaders decided to release 100 million barrels of diesel and crude oil from their reserves over four months to address energy supply concerns. Saudi Arabia also reduced the price of its benchmark grade to Asia by $5 below the regional benchmark. However, fuel supplies remain tight due to conflicts affecting refineries in the Middle East and Russia.