Japan Leads Asia Stock Rally, Dollar Rises After Strong US Payroll Data

By Kevin Buckland

TOKYO – Asian stocks saw a surge while the dollar hit a new seven-week high against the yen on Monday, buoyed by strong U.S. labor data that alleviated recession fears and reduced expectations for interest rate cuts.

Following the release of the non-farm payrolls report on Friday, which revealed an unexpected addition of the most jobs in six months for September, short-term U.S. Treasury yields rose.

Despite escalating tensions with Israel targeting Lebanon and the Gaza Strip—one year since the Hamas attack that ignited the conflict—prices retreated from a month-long peak.

The Japanese market led regional equity gains, advancing by 2% as of 0015 GMT, supported by a weaker yen. Australia’s stock benchmark recorded a modest increase of 0.12%, while South Korea’s Kospi rose by 0.29%. Hong Kong’s market had not yet opened, and mainland Chinese stocks remained closed for the Golden Week holiday until Tuesday. The MSCI index representing Asia-Pacific shares increased by 0.4%.

U.S. futures edged up by 0.08% after the cash index set an all-time record following Friday’s payrolls data. According to Kyle Rodda, a senior financial market analyst, current market reactions indicate growing themes of economic growth and its implications for future earnings, alongside a revival of the notion of U.S. economic exceptionalism.

The U.S. dollar peaked at 149.10 yen for the first time since August 16, before trading at 148.87 yen, a gain of 0.18%. Atsushi Mimura, Japan’s chief currency diplomat, stated that officials would monitor foreign exchange movements, particularly speculative trading.

The euro dipped by 0.07% to $1.0971, edging closer to its recent seven-week low of $1.09515. Expectations for a large 50-basis-point rate cut by the Federal Reserve on November 7 were entirely reversed following the payrolls release, with traders now assigning a 95% probability for a quarter-point reduction and a slim chance of rates remaining steady.

The two-year U.S. Treasury yield increased by 1.7 basis points to 3.9488%, reaching its highest level in over a month. Gold prices fell slightly by 0.1% to $2,849.29 per ounce, though they remained close to last month’s peak of $2,685.42.

Crude oil prices also experienced a downturn after rising significantly over the past week amid escalating tensions in the Middle East. Futures for Brent crude dropped by 65 cents to $77.40 per barrel, while U.S. West Texas Intermediate crude futures fell by 53 cents to $73.85 per barrel.