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Asian stocks soar, dollar hits seven-week high on yen

Asian stocks

Nikkei led regional equity gains with a 2% rally, Australia’s stock benchmark gained 0.12% and South Korea’s Kospi added 0.29%

Asian stocks soared and the dollar hit a fresh seven-week high on the yen on Monday after strong U.S. labour data dispelled fears of a recession and spurred a sharp paring of rate-cut bets.

Short-term U.S. Treasury yields advanced after the closely watched non-farm payrolls report on Friday showed the economy unexpectedly added the most jobs in six months in September.

Crude oil prices eased from a one-month high even as the Middle East strife escalated.

Nikkei led regional equity gains with a 2% rally as of 0015 GMT, given additional momentum by the weaker yen.

Australia’s stock benchmark gained 0.12% and South Korea’s Kospi added 0.29%.

Hong Kong’s Hang Seng had yet to open, and mainland Chinese stock markets remain closed until Tuesday for the Golden Week holiday.

MSCI’s broadest index of Asia-Pacific shares jumped 0.4%.

U.S. Dow futures pointed 0.08% higher after the index closed at an all-time high after the payrolls data on Friday.

The reaction in markets conveys what the key themes and risks for market participants are presently: economic growth, and its impact – for equities – on future earnings, according to Kyle Rodda, senior financial market analyst at Capital.com.

There’s also seemingly a revival of the U.S. economic exceptionalism trade, Rodda said.

The U.S. dollar rose as high as 149.10 yen for the first time since August 16 before last trading hands up 0.18% at 148.87 yen.

Japan’s top currency diplomat, Atsushi Mimura, said on Monday that officials will monitor foreign exchange moves, including speculative trading.

The euro dropped 0.07% to $1.0971, sliding back towards Friday’s seven-week low at $1.09515.

Bets for a super-sized 50 bp rate cut at the Fed’s next policy announcement on November 7 – which had been above 50% a week ago – were completely erased after the payrolls report.

Instead, traders now lay 95% probability on a quarter-point cut, with a small chance that the policy rate stays unchanged, as per CME Group’s FedWatch Tool.

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