SINGAPORE, October 05, 2026 (DAILYNWZ) — Asian stocks rose on Monday while the dollar weakened and bond yields eased as investors scaled back expectations for another Federal Reserve rate hike after US employment data pointed to a sharper slowdown in the labor market.
Trading was thin across Asia because markets in China, South Korea and Australia’s New South Wales were closed for holidays, leaving investors to follow Friday’s moves on Wall Street.
US job data released last week showed employment growth slowed more than expected in September, while payrolls for the previous two months were revised sharply lower. The figures substantially reduced expectations for another Fed rate increase this month.
Markets were pricing a 22% probability of a Fed hike this month, down from 64% a week earlier, according to the CME FedWatch tool.
“Labour conditions are stable overall, but Friday’s downward revisions signal that the US economy has lost jobs in two out of the nine months year to date,” said Jose Torres, senior economist at Interactive Brokers. He added that the risk of further employment losses meant the Fed could not raise rates by another 100 basis points from current levels, which he said was what the yield curve was pricing in.
Japan’s Nikkei rose 2% early in the session, while Australia’s S&P/ASX 200 gained 0.5%. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.15%.
US equity futures also pointed higher, with Nasdaq 100 futures rising 0.3% and S&P 500 futures gaining 0.1%. EURO STOXX 50 futures advanced 0.3%, while FTSE futures added 0.4%.
Brazilian markets were expected to open sharply higher after Senator Flavio Bolsonaro advanced to a runoff against President Luiz Inacio Lula da Silva in the country’s presidential election, outperforming expectations in the first round.
Bond markets steadied after a recent selloff. The benchmark 10-year US Treasury yield edged down to 5.2643%, while the two-year yield stood at 4.8143%. Yields had initially fallen after the jobs report but ended higher on Friday because the data did not eliminate the possibility of further Fed increases in coming months.
Government bond yields across major economies remain near multi-year highs, pressured by deteriorating public finances, heavy issuance and elevated energy costs.
Cedric Lam, senior investment strategist at Standard Chartered, said softer-than-expected inflation data could eventually support lower yields, although “market technicals” were temporarily delaying that move because of forced selling by hedge funds and real estate investment trusts.
The dollar weakened as expectations for a Fed hike receded. The euro recovered from a 17-month low to $1.1243, while sterling edged up to $1.3241. The dollar slipped to 157.81 yen.
“Tighter policy elsewhere and a growing case for an October Fed pause are US dollar headwinds,” said Elias Haddad, global head of markets strategy at BBH. He added that stronger US growth and foreign demand for US securities continued to tilt dollar risks upward.
Oil prices remained elevated after Yemen’s Iran-backed Houthi movement said it had launched ballistic missiles and drones at Saudi Aramco sites in Riyadh and the Khurais area. Brent crude was little changed at $102.20 a barrel, while US crude stood at $90.75.
Spot gold rose 0.3% to $4,154.32 an ounce.