Today's Edition
SINGAPORE (REUTERS)
Stocks rose and the dollar wobbled on Monday after dismal US labor data sealed the case for an interest rate cut this month, while the yen fell as investors girded for uncertainty in Japan following the resignation of Prime Minister Shigeru Ishiba.
Gold prices held near a record-high while US Treasury yields hovered close to five-month lows after data showed the world's largest economy created far fewer jobs than expected in August, with markets factoring in chances of a jumbo rate cut.
Much of the focus last week was on elevated long-end bond yields across the globe as investors fretted about the state of various countries' finances from Britain and France to Japan.
Some of those worries could return after Japan's Ishiba resigned on Sunday, leading to political uncertainty in the world's fourth-largest economy and clouding the policy path for the Bank of Japan.
The spotlight will be on who replaces Ishiba, with fretting investors that an advocate of looser fiscal and monetary policy, such as Liberal Democratic Party veteran Sanae Takaichi, who has criticised the BOJ's interest rate hikes, could take the helm next.
Yields on super-long Japanese government bonds (JGBs) have already been hovering near record highs, while Japan's Nikkei share gauge has recently fallen from last month's all-time peak.
The yen fell across the board and was last 0.6% lower at 148.39 per dollar, while the Nikkei surged 1.8%, just shy of its recent record-high.
MSCI's broadest index of Asia-Pacific shares outside Japan was 0.4% higher. Blue-chip China stocks rose 0.3% in early trading while Hong Kong's Hang Seng index gained 0.35%.
Rate Cuts
The prospect of an interest rate cut by the Federal Reserve later this month raised up stock markets while weighing on Treasury yields and the dollar.
S&P 500 futures pointed 0.19% higher in early Asian hours on Monday after a volatile session on Friday where the index hit a record high but then closed 0.3% lower. European futures advanced 0.45%.
The US two-year yields, which are tied to interest rate policy, were 2 basis points (bps) higher at 3.527%, near the five-month low of 3.464% hit on Friday.
Investor attention this week will be on the US inflation report on Thursday to gauge the risk of rising prices that could help temper some of the enthusiasm for a larger rate cut.
In the currency market, the euro eased a bit to $1.1713 after surging 0.6% on Friday, while sterling last fetched $1.3492 after a 0.5% rise on Friday.
Investor attention will also be on France where Prime Minister Francois Bayrou faces a confidence vote on Monday, which he is expected to lose, plunging the euro zone's second-largest economy deeper into political crisis.
In commodities, gold prices were at $3,588 per ounce, just shy of the $3,600 milestone. Gold is up 37% this year after rising 27% in 2024.
Oil prices climbed after OPEC+ agreed over the weekend to raise output at a slower pace from October on expectations of weaker global demand. Brent crude and US West Texas Intermediate crude rose about 1% each.
