Market Overview
Global markets are grappling with mixed investor sentiment, primarily influenced by recent softer US jobs data. While the data significantly cooled expectations for a Federal Reserve rate hike in October, boosting risk appetite in many Asian markets and non-yielding commodities like gold, persistent concerns about elevated US Treasury yields and deepening political and fiscal instability in the Eurozone are fostering caution, particularly ahead of the European market open.
Markets
Most Asian equity markets posted gains on Monday, led by tech shares. Japan’s Nikkei 225 (^N225) closed up 2.40% at 69,946.86. The MSCI Asia Pacific index also gained approximately 1.1%. In contrast, Australia’s S&P/ASX 200 (^AXJO) pared early gains to close largely flat, ending the day up just 0.05% at 8,686.40. Hong Kong’s Hang Seng index (^HSI) also traded nearly flat, showing a marginal gain of 0.08% at 23,992.00. Markets in mainland China and South Korea were closed for holidays.
On Wall Street, major indices ended the previous week positively following the US jobs data. The S&P 500 (^GSPC) rose 0.73% to close at 7,722.72, while the tech-heavy Nasdaq Composite (^IXIC) rallied 1.19% to 27,190.86, hitting an all-time high. The Dow Jones (^DJI) added 0.49% to 51,176.96. In pre-market trading, US equity futures were mixed, with elevated Treasury yields weighing on sentiment.
In commodities, Brent Crude (BZ=F) stood at $101.61, down 0.63%, as Saudi Arabia cut prices to Asia amidst expanded flows, offsetting intensified fighting in Yemen. Gold (GC=F) edged higher, trading at $4,183.80, up 0.52%, as US rate rise bets cooled. Copper also gained, rising 0.6% to trade at $US14,327 a tonne on the London Metal Exchange, with futures gaining as much as 0.9%.
The Euro (EURUSD=X) hit a 17-month low against the US dollar, trading at 1.1196, down 0.48%, amidst political uncertainty in Spain and France. Meanwhile, the US 10-Year Treasury yield (^TNX) was at 5.277%, up 4.00 basis points, remaining a key focus for investors as it climbed to its highest level in more than two decades, raising concerns about higher borrowing costs.
What Drove Markets
The primary driver of recent market activity has been the weaker-than-expected US employment report. Nonfarm payrolls rose just 29,000 last month, falling below all economists’ estimates, and wage growth also slowed. This prompted traders to significantly pare back bets on a Federal Reserve rate hike this month, with money markets pricing in less than a 25% chance of an October increase. This development supported a rally in US tech stocks on Friday and improved risk appetite in many Asian markets. Atchison principal Kev Toohey noted, “Softer US jobs have reduced pressure on the Federal Reserve to raise interest rates further, but that doesn’t change the picture at home. We continue to prefer offshore equities over Australian, and would treat any local relief rally with caution.”
Despite the easing of Fed hike bets, US Treasury yields remain elevated. The 10-year yield has climbed to its highest level in over two decades, raising concerns that higher borrowing costs could continue to weigh on stock valuations, even if the Fed holds rates steady in the near term. This contributed to Australian market gains being pared back.
Political instability and a deteriorating fiscal outlook across the Eurozone are significantly impacting market sentiment ahead of the European open. Concerns over Spain, which is preparing for an early election, and France, where opposition parties are unwilling to compromise with the current administration, have driven the euro to its weakest level against the U.S. dollar in 17 months, the lowest level since May 19, 2025. These factors are expected to lead to a cautious start for European equity markets.
In commodity markets, copper and gold benefited from cooled US rate hike expectations. Brent crude, however, saw declines despite geopolitical risks from the Yemen conflict reshaping regional oil supply, as Saudi Arabia cut prices to Asia, increasing supply.
The Australian share market saw early gains trimmed, closing flat on a quiet day of trading due to a public holiday in NSW and the ACT. On the ASX, the healthcare sector rose 0.7% and materials rose 0.4%, while consumer discretionary shed 0.9%. Locally, the Melbourne Institute’s Monthly Inflation Gauge showed its smallest increase in three months, rising 0.3% month-on-month in September, suggesting some success in curbing inflationary pressures even as inflation risks linger.
Stocks to Watch
Several individual stocks saw notable movements:
- On the ASX, CSL (CSL.AX) gained 0.94% to 176.99 after the company inked an exclusive deal with Swiss biotech Alentis Therapeutics, contributing to the healthcare sector’s strength.
- Wesfarmers (WES.AX) shed 0.98% to 75.47 as part of broader consumer discretionary sector weakness.
- Heavyweight contributors BHP Group (BHP.AX) and Rio Tinto (RIO.AX) rose 1.11% to 61.89 and 0.70% to 165.96, respectively.
- Maas Group gained 3% to $7.01 after Macquarie flagged Firmus’ upcoming public listing as a boost for the construction services company.
- Macmahon Holdings rose 4.5% to $1.05 after inking a $98 million deal with Vault Minerals.
- Fisher & Paykel rose 1.5% to $37.33 following news that it would sell 12 hectares of land in New Zealand for $45.3 million.
- Cleanaway gained 2.7% to $2.66 after private equity group EQT Infrastructure reconfirmed its $9.4 billion takeover bid for the waste management group.
- In Japan, Nippon Paint shares rose 1% after the company agreed to acquire Akzo Nobel’s Southeast Asian unit in a deal valued at $1.35 billion.
- TSMC (2330.TW) rose 3.00% to 2,575.00 in Taiwan on reports of a potential collaboration with Elon Musk’s Terafab, contributing to strength across the regional semiconductor sector.