Weaker US jobs data eases Fed rate hike bets, lifts global markets

Stocks started the week on a positive note as investors scaled back expectations for aggressive interest rate hikes by the Federal Reserve. This shift came after the latest US jobs report showed weaker-than-anticipated job growth in September, along with significant downward revisions for the previous two months. The revised data significantly reduced the likelihood of another rate hike this month.

Trading activity in Asia was lighter than usual due to holidays in China, South Korea, and Australia’s New South Wales. As a result, markets were more influenced by Wall Street’s performance from the previous Friday. The revised jobs data has lowered the probability of a Fed rate hike this month to 22%, down from 64% just a week earlier, according to the CME FedWatch tool.

The reduced chance of a Fed rate hike boosted regional markets, with Japan’s Nikkei climbing 2% and Australian stocks rising 0.5%. MSCI’s Asia-Pacific index also edged higher. Meanwhile, US equity futures, including Nasdaq and S&P 500, showed modest gains. In Brazil, markets were poised for a rally following the presidential election’s first-round results.

In the bond market, a recent selloff paused, with US Treasury yields retreating slightly. However, yields remain near multi-year highs due to government financial pressures and elevated energy costs. Analysts noted that while softer inflation data has emerged, market technicals are delaying a potential drop in bond yields. Commodities like oil stayed elevated due to geopolitical tensions in the Middle East, while spot gold saw a slight increase.