Asian stocks rose on Monday as investors reduced their bets on a US interest rate hike after data showed job losses in July. The positive sentiment was driven by figures from the US Bureau of Labor Statistics indicating 23,000 jobs were lost last month, with growth in May and June revised down. This suggested a slowing US economy, leading traders to expect the Federal Reserve to hold off on hiking borrowing costs.
Market Reaction
The news helped Wall Street close higher, with the S&P 500 reaching a fresh record high. Tech firms, which benefit from lower rates, saw significant gains, pushing the Nasdaq up by more than one percent. This positive trend continued in Asia, with Tokyo's Nikkei 225 climbing two percent, led by advances in tech firms like Kioxia, Tokyo Electron, and Advantest. Seoul also saw gains as chipmakers SK hynix and Samsung rallied.
Geopolitical Tensions
However, market sentiment was somewhat dented by another spike in oil prices as hopes for an end to the Middle East crisis faded. Crude prices jumped around one percent, extending gains from the previous week. The situation in the Strait of Hormuz remains tense, with Iran's Revolutionary Guards insisting they will not reopen the strait until the United States complies with a list of demands.
Future Outlook
Inflation data due later this week will be closely watched by investors. According to National Australia Bank's Rodrigo Catril, the recent jobs report reduces the case for inflation pressures in the labor market but does not entirely rule out a September hike. The next consumer price index prints for July and August ahead of the September Federal Open Market Committee meeting will be key data releases to watch.
