Today’s News
Asian stocks surged on Monday, led by Japan’s Nikkei, while the U.S. dollar hit a new seven-week high against the yen. This rally followed unexpectedly strong U.S. labor data, which alleviated fears of a recession and led to a sharp reduction in expectations for significant rate cuts by the Federal Reserve.
Image Source: Reuters
Friday’s non-farm payroll report showed the U.S. economy added the most jobs in six months during September, pushing short-term U.S. Treasury yields higher. The robust data dampened hopes for a larger interest rate cut, erasing earlier bets for a 50-basis-point reduction at the Fed’s upcoming November policy meeting.
Japan’s Nikkei climbed 2%, fueled by the weaker yen, while Australia’s stock benchmark rose 0.12%, and South Korea’s Kospi gained 0.29%. Hong Kong’s Hang Seng had not yet opened, and mainland Chinese markets remained closed for the Golden Week holiday. The MSCI’s broadest index of Asia-Pacific shares added 0.4%.
U.S. futures indicated modest gains, with Dow futures up 0.08% after Friday’s strong performance. “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.
The U.S. dollar surged to 149.10 yen, its highest level since mid-August, before settling at 148.87 yen. Japan’s top currency diplomat, Atsushi Mimura, stated that officials are monitoring foreign exchange moves, including speculative trading. The euro dipped 0.07% to USD 1.0971, moving back toward Friday’s seven-week low.
The likelihood of a 50-basis-point rate cut by the Federal Reserve in November has now been completely erased, with traders expecting a quarter-point cut instead, or potentially no change at all, according to CME Group’s FedWatch Tool. The two-year U.S. Treasury yield rose to 3.9488%, the highest in over a month.
Gold slipped 0.1% to USD 2,649.29 per ounce, remaining close to last month’s record high. Oil prices also eased after their largest weekly gains in more than a year, as tensions in the Middle East persist. Brent crude futures fell 65 cents to USD 77.40 per barrel, while U.S. West Texas Intermediate crude futures dropped 53 cents to USD 73.85 per barrel.
Other News
Italy to Sell Up to 15% of Monte dei Paschi
Italy plans to sell up to 15% of its stake in Monte dei Paschi, reducing its ownership to as low as 12%. The government could raise up to 900 million euros (USD 987M) from the share placement.
Chain Bridge Bank’s IPO Falters with 2% Drop
Chain Bridge Bancorp, the GOP’s preferred bank, saw its shares fall 2% on its NYSE debut, valuing the company at USD 138 million, as the GOP-linked bank struggled to attract investors.
U.S. Dividend ETFs Surge After Fed Rate Cut
U.S. dividend ETFs saw USD 3.05 billion in inflows in September after the Fed’s rate cut, as investors sought income-generating stocks. Rising Treasury yields could slow future inflows.
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