TOKYO- Asian stocks rallied and the dollar reached a fresh seven-week peak on the yen on Monday after blowout US labor market data dispelled fears of a recession and spurred a sharp paring of rate-cut bets.
US Treasury yields touched two-month highs, extending their rise 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 peak even as Israel bombed targets in Lebanon and the Gaza Strip, with Monday marking one year since the Hamas attack that triggered war.
Japan’s Nikkei led regional equity gains with a 2.28 percent rally as of 0515 GMT, given additional momentum by the softer yen.
Hong Kong’s Hang Seng rose 1.45 percent, Australia’s stock benchmark added 0.68 percent and South Korea’s Kospi gained 1.53 percent. Mainland Chinese stocks remain closed until Tuesday for the Golden Week holiday.
MSCI’s broadest index of Asia-Pacific shares climbed more than 1 percent.
US Dow futures eased slightly, after the cash index closed at an all-time peak on Friday following the payrolls data.
“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,” said Kyle Rodda, senior financial market analyst at Capital.com.
“There’s also seemingly a revival of the US economic exceptionalism trade.”
The US dollar pushed as high as 149.10 yen for the first time since Aug. 16 before last trading hands at 148.49 yen.
Gains were arrested after Japan’s top currency diplomat, Atsushi Mimura, said officials were monitoring foreign exchange moves, including speculative trading, “with a sense of urgency”.
The euro eased 0.08 percent to $1.0966, slipping back towards Friday’s seven-week trough at $1.09515.
Bets for a super-sized 50-basis-point rate cut at the Federal Reserve’s next policy announcement on Nov. 7 – which had been above 50 percent a week ago – were completely erased after the payrolls report.
Instead, traders now lay 96 percent odds on a quarter-point cut, with a small chance that the policy rate stays unchanged, according to CME Group’s FedWatch Tool. –
