Hong Kong (AFP) – Most stocks rallied Monday after a big miss on US jobs creation gave the Federal Reserve breathing room to hold off an interest rate hike this month, while traders were also cheered by another drop in oil prices that eased inflation concerns. Investors in Asia followed the positive lead from their colleagues on Wall Street, where all three main indexes spiked in reaction to the highly anticipated non-farm payrolls data. The report showed the world’s top economy created just 29,000 jobs in September — well short of forecasts for around 90,000 — while the readings for the previous two months were also revised down, with July’s showing that posts were actually lost.
Markets immediately repriced the likelihood of a Fed rate hike, with CME’s FedWatch tool seeing just over a 20 percent chance, compared with more than 65 percent early last week. Expectations that interest rates would be lifted at least once more this year — after September’s hike — have sent government borrowing costs soaring, with 10-year US Treasury yields last week hitting a 24-year high. The spike has been driven by stubbornly high inflation, government spending, and an increase in companies borrowing to pay for their AI investments.
“The recent hiring trend has settled into that not-too-hot, not-too-cold Goldilocks porridge zone of roughly 40,000 to 60,000 jobs a month,” wrote Stephen Innes at SPI Asset Management. “Core PCE (personal consumption expenditure) is still uncomfortable at three percent year over year, but the shorter-term pulse has cooled noticeably,” he added, referring to the Fed’s preferred gauge of inflation. “Put the two together, and October starts looking less like a meeting the Fed needs to attack and more like one it can comfortably sit through, spoon still in hand, while December remains the bowl with a little more heat in it.”
With the prospect of borrowing costs being kept on hold for now, tech-rich markets were the big beneficiaries as such firms rely on debt to drive their vast investments. Tokyo jumped more than two percent to top 70,000 points for the first time since July, while Taipei climbed a similar amount. Sydney, Singapore, Manila, and Jakarta also advanced, but there were losses in Hong Kong and Wellington. Seoul and Shanghai were closed for holidays.
The mood was also helped by G7 leaders’ decision to release 100 million barrels of diesel and crude oil from their reserves over four months and to “refrain from export restrictions on energy.” The move followed pressure from President Donald Trump to tap the European Union’s strategic diesel reserves or face a US ban on diesel exports. While exports of crude from the Middle East have been returning to near pre-war levels in recent weeks, the situation for fuels such as diesel remains tight due to refineries being damaged during the conflict. Russian refineries have also suffered damage due to Ukrainian strikes.
Both main contracts fell Monday, extending Friday’s drop, though the losses were pared by news that Yemen had started a new military operation to retake all territory held by the Houthis. The announcement sets an ambitious goal for the embattled government, which recently lost swathes of the country’s Red Sea coastline and areas around the Bab al-Mandab Strait — a chokepoint for international shipping — after a lightning offensive by the Iran-backed Houthis.
– Key figures at around 0230 GMT –
Tokyo – Nikkei 225: UP 2.5 percent at 70,037.61
Hong Kong – Hang Seng Index: DOWN 0.1 percent at 23,945.35
Shanghai – Composite: Closed for a holiday
West Texas Intermediate: DOWN 1.2 percent at $90.04 per barrel
Brent North Sea Crude: DOWN 0.8 percent at $101.47 per barrel
Dollar/yen: DOWN at 157.81 yen from 157.87 yen on Friday
Euro/dollar: DOWN at $1.1210 from $1.1256
Pound/dollar: DOWN at $1.3220 from $1.3244
Euro/pound: DOWN at 84.80 pence from 84.99 pence
New York – Dow: UP 0.5 percent at 51,176.96 (close)
London – FTSE 100: UP 0.3 percent at 10,461.95 (close)
© 2024 AFP
