World markets started Monday on the front foot as a cooler-than-expected US employment report persuaded investors that the Federal Reserve may hold off on raising interest rates again this month. Japan's Nikkei climbed 2 percent in early trade, Australian shares added half a percent, and MSCI's broadest index of Asia-Pacific shares outside Japan edged 0.15 percent higher, with thin volumes as China, South Korea and parts of Australia observed holidays.
The September US jobs report showed employers added fewer workers than forecast, while the payroll counts for the prior two months were revised sharply lower. Money markets responded decisively: investors now see just a 22 percent chance of a Fed rate hike this month, down from 64 percent a week ago, according to the CME FedWatch tool.
Fed expectations reset
"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, and the risk of further employment losses means that the Fed can't hike another 100 basis points from here, which is what the curve is pricing in," said Jose Torres, senior economist at Interactive Brokers.
The recalibration lifted risk appetite across regions. Nasdaq futures advanced 0.3 percent and S&P 500 futures gained 0.1 percent, while EUROSTOXX 50 futures rose 0.3 percent and FTSE futures tacked on 0.4 percent. Brazilian markets were also expected to open higher after it became clear Senator Flavio Bolsonaro would face President Luiz Inacio Lula da Silva in a presidential runoff following a stronger-than-expected first-round showing.
Bonds steady after a bruising selloff
A recent rout in global bonds paused on Monday. The benchmark 10-year US Treasury yield retreated slightly to 5.2643 percent, with two-year yields at 4.8143 percent — still near multi-decade highs after last week's run-up. Analysts said yields remain pressured by deteriorating government finances, heavy issuance and elevated energy costs, but some see room for relief. "We do not expect this to be an extended selloff. We have initiated an opportunistic bullish idea on US 10-year government bonds," said Cedric Lam, senior investment strategist at Standard Chartered.
Dollar wobbles, oil and gold firm
The dollar lost ground as rate-hike expectations faded. The euro bounced from a 17-month low to $1.1243, sterling edged up to $1.3241, and the greenback slipped marginally against the yen to 157.81. In commodities, Brent crude futures were little changed at $102.20 a barrel and US crude stood at $90.75, staying elevated after Yemen's Iran-backed Houthis said they launched missiles and drones at Saudi Aramco sites in Riyadh and the Khurais area. Spot gold rose 0.3 percent to $4,154.32 an ounce.
Sources:
Stocks upbeat, dollar wobbles as Fed hike bets recede (Reuters, Oct 5, 2026)
The September US jobs report showed employers added fewer workers than forecast, while the payroll counts for the prior two months were revised sharply lower. Money markets responded decisively: investors now see just a 22 percent chance of a Fed rate hike this month, down from 64 percent a week ago, according to the CME FedWatch tool.
Fed expectations reset
"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, and the risk of further employment losses means that the Fed can't hike another 100 basis points from here, which is what the curve is pricing in," said Jose Torres, senior economist at Interactive Brokers.
The recalibration lifted risk appetite across regions. Nasdaq futures advanced 0.3 percent and S&P 500 futures gained 0.1 percent, while EUROSTOXX 50 futures rose 0.3 percent and FTSE futures tacked on 0.4 percent. Brazilian markets were also expected to open higher after it became clear Senator Flavio Bolsonaro would face President Luiz Inacio Lula da Silva in a presidential runoff following a stronger-than-expected first-round showing.
Bonds steady after a bruising selloff
A recent rout in global bonds paused on Monday. The benchmark 10-year US Treasury yield retreated slightly to 5.2643 percent, with two-year yields at 4.8143 percent — still near multi-decade highs after last week's run-up. Analysts said yields remain pressured by deteriorating government finances, heavy issuance and elevated energy costs, but some see room for relief. "We do not expect this to be an extended selloff. We have initiated an opportunistic bullish idea on US 10-year government bonds," said Cedric Lam, senior investment strategist at Standard Chartered.
Dollar wobbles, oil and gold firm
The dollar lost ground as rate-hike expectations faded. The euro bounced from a 17-month low to $1.1243, sterling edged up to $1.3241, and the greenback slipped marginally against the yen to 157.81. In commodities, Brent crude futures were little changed at $102.20 a barrel and US crude stood at $90.75, staying elevated after Yemen's Iran-backed Houthis said they launched missiles and drones at Saudi Aramco sites in Riyadh and the Khurais area. Spot gold rose 0.3 percent to $4,154.32 an ounce.
Sources:
Stocks upbeat, dollar wobbles as Fed hike bets recede (Reuters, Oct 5, 2026)
