Asian market opened the week firmer on Monday as a sharp slowdown in US hiring pushed investors towards a Federal Reserve pause this month, giving rate-sensitive technology stocks room to rebound.
Japan led the advance, with the Nikkei 225 jumping 2.5% above 70,000 to a three-month high, while Taiwan’s Taiex gained about 2.6%.
MSCI’s broad Asia-Pacific index outside Japan rose roughly 0.9%. Trading was thinner than usual, with mainland China and South Korea shut for holidays.
The rally came even as US Treasury yields remained above 5% and oil stayed above $100.
Weak jobs data flips the Fed debate
Friday’s US employment report changed the near-term rates story.
Nonfarm payrolls rose by just 29,000 in September, well below expectations near 90,000, while July and August were revised down by a combined 60,000. The unemployment rate edged up to 4.2%.
Markets now assign only about a 22% chance to an October Fed hike, down from roughly 64% a week earlier. December remains different, with another increase still seen as possible.
That shift matters for Asian growth stocks, which were hit hard by September’s bond selloff. The US 10-year yield eased to around 5.26% on Monday but remains close to multi-decade highs.
Ed Yardeni and Toby Hearst wrote in Yardeni QuickTakes that the weak jobs report has largely removed October from the immediate debate, although persistent inflation could still keep another hike in play later this year.
Japan and Taiwan lead the rebound
Japan provided the clearest expression of the relief trade. The Nikkei climbed above 70,000 as Advantest and other electronics and machinery shares rallied, while the broader Topix gained about 1.2%.
Taiwan also outperformed, with TSMC, MediaTek and Delta Electronics helping lift the Taiex roughly 2.6%.
That keeps the AI trade at the centre of Asia’s equity story even as investors question whether premium semiconductor valuations can coexist with 5%-plus US yields.
Australia’s ASX 200 was only modestly higher, while India was poised for a stronger opening after its longest weekly losing streak in 25 years.
Nomura analysts told The Wall Street Journal that India’s recent correction reflected deeper concerns around long-term growth and valuation, suggesting investors may remain selective even if the rates backdrop improves.
Five percent yields remain the bigger test
Monday’s rally is not a clean risk-on signal. The US 10-year yield remains near 5.26%, while the two-year is around 4.8%, levels that still raise financing costs across the region.
Oil is another constraint. Brent slipped about 0.7% to $101.59 and WTI fell towards $90.12 after the G7 agreed to release up to 100 million barrels of emergency crude and diesel stocks over four months.
The move eases immediate supply pressure, but Middle East infrastructure risks remain unresolved.
Europe is also feeding volatility into Asia. The euro has fallen to a 17-month low as French fiscal concerns widen the spread over German bonds.
UOB economist Lee Sue Ann told The Wall Street Journal that the stress raises the risk of outflows and tighter euro-area financial conditions.
The next test comes quickly. US services data are due Monday, followed by minutes from the Fed’s September meeting on Wednesday.
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