Asian stock indexes rose and the dollar hit a new seven-week high against the yen on Monday after unexpected US labour market data dispelled fears of recession and spurred a sharp rate cut.
US Treasury yields hit two-month highs, extending their gains after a closely watched non-farm payrolls report on Friday showed the economy unexpectedly added the most jobs in six months in September.
Crude oil prices fell from a one-month peak even as Israel bombed targets in Lebanon and Gaza. Monday marked the one-year anniversary of the Hamas attack that sparked the war.
Japan’s Nikkei (.N225) index, open new tab, led gains in regional shares, up 2.28 per cent as of 05:15 GMT, helped by a weaker yen.
Hong Kong’s Hang Seng (.HSI), open new tab rose 1.45 per cent, Australia’s stock benchmark (.AXJO), open new tab added 0.68 per cent and South Korea’s Kospi (.KS11), open new tab gained 1.53 per cent. Mainland Chinese stocks remain closed until Tuesday due to the Golden Week holiday.
MSCI’s broadest index of Asia-Pacific shares (.MIAP00000PUS), open new tab, climbed more than 1 per cent.
US Dow futures were slightly lower after the money index closed at a record high on Friday following the release of payrolls data.
On Monday, the yield on 10-year US Treasuries hit 3.992% for the first time since August 7. Two-year bond yields rose to 3.965%, a level last seen on August 22. That sent regional bond yields higher, while the yield on 10-year Japanese government bonds hit its highest level since August 6 at 0.915%.
Gold fell 0.35% to $2,643 an ounce amid the dollar’s recovery, although it remained not far from last month’s record peak of $2,685.42.
Brent crude futures fell 35 cents to $77.70 a barrel after hitting $79.30 on Friday, the highest since 30 August. US West Texas Intermediate crude futures fell 25 cents to $74.13. They rose to $75.57 on Friday, the highest level since August 29.
Analysts believe that many of the factors that pressured the US dollar over the summer have changed. In particular, recession fears are waning, and price dynamics show that the limits of the dovish reaction function pricing have been reached with this data.
MUFG noted that this is the second time the dollar index has pulled back to the 100.00 support level in recent years. The last time in July 2023, the dollar index tested that level but failed to break below it before posting a strong 7.8 per cent bounce.
The yen fell slightly to 149.10 per dollar, its lowest level since August 16. It then trimmed losses and is trading around 148.40. This followed last week’s more than 4% decline, the biggest weekly percentage drop since early 2009.
