Equities rallied on Monday after a big miss on US jobs creation gave the Federal Reserve breathing room to hold off an interest rate hike this month, while traders were also cheered by another drop in oil prices that eased inflation concerns. In Hong Kong, the benchmark Hang Seng Index inched up 68 points, or 0.3 percent, to 24,040 on light turnover of HK$98.1 billion. The tech index was 25 points, or 0.6 percent, up at 4,183 while the China Enterprises Index was 21 points, or 0.3 percent, higher at 8,051. The gains came after highly anticipated US non-farm payrolls data showed the world's top economy created just 29,000 jobs in September – well short of forecasts for around 90,000 – while the readings for the previous two months were also revised down, with July's showing posts were actually lost. Markets immediately repriced the likelihood of a Fed rate hike, with CME's FedWatch tool seeing just over a 20 percent chance, compared with more than 65 percent early last week. Expectations that interest rates would be lifted at least once more this year – after September's hike – have sent government borrowing costs soaring, with 10-year US Treasury yields last week hitting a 24-year high. The spike has been driven by stubbornly high inflation, government spending and an increase in companies borrowing to pay for their AI investments. "The recent hiring trend has settled into that not-too-hot, not-too-cold Goldilocks porridge zone of roughly 40,000 to 60,000 jobs a month," wrote Stephen Innes at SPI Asset Management. "Core PCE [personal consumption expenditure] is still uncomfortable at three percent year over year, but the shorter-term pulse has cooled noticeably," he added, referring to the Fed's preferred gauge of inflation. "Put the two together, and October starts looking less like a meeting the Fed needs to attack and more like one it can comfortably sit through, spoon still in hand, while December remains the bowl with a little more heat in it." With the prospect of borrowing costs being kept on hold for now, tech-rich markets were the big beneficiaries as such firms rely on debt to drive their vast investments. In Tokyo, the Nikkei posted a three-month closing high 69,946 on gains of 1,637 or 2.4 percent, driven by AI-related stocks after Wall Street's gains at the end of last week. The broader Topix rose 54 points, or 1.33 percent, to 4,145. Seoul and Shanghai were closed for holidays. The mood was also helped by G7 leaders' decision to release 100 million barrels of diesel and crude oil from their reserves over four months and to "refrain from export restrictions on energy". The move followed pressure from US President Donald Trump to tap the European Union's strategic diesel reserves or face a US ban on diesel exports. Also, Saudi Arabia slashed the price of its benchmark grade to Asia to US$5 below the regional benchmark. But while exports of crude from the Middle East, excluding Iran, surpassed their pre-war levels last week – according to maritime tracking firm Kpler – the situation for fuels such as diesel remains tight, owing to refineries being damaged during the conflict. (Reuters) Edited by Tony Sabine

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Trade Development Council chairman Frederick Ma on Monday said the body would consider scaling up its presence in Central Asia. He said the TDC had already set up an office in Almaty, Kazakhstan’s largest city, and was planning to increase manpower there to handle increasingly active business dealings and information enquiries. For the next step, it would study upgrading the office or setting up more branches in other Central Asian countries. Eight companies from Belt and Road countries had, Ma added, submitted listing applications to the SAR. He also expressed hope that more companies in emerging markets would use Hong Kong's financial expertise to expand their businesses. Improved Sino-US relations, Ma stressed, would also be beneficial to the city. “For Hong Kong, our exports have been very strong. Our exports recorded over 40 percent increase in the first eight months of this year,” he said. “As a matter of fact, Trade Development Council has revised our export forecast to 42 to 47 percent recently in light of the strong exports. “So I think that, of course, good relationship between US and China is going to help, it’s not going to hurt, and we are continuing to [do] good business particularly in the AI and semiconductor sector.” Edited by Tony Sabine

Regional stocks were off to a mixed start on Monday while the US dollar edged lower and bonds steadied, as investors trimmed bets on an aggressive policy tightening cycle by the Federal Reserve following cooler-than-expected US jobs data. Trading was thin in Asia with holidays in the Chinese mainland and South ⁠Korea, leaving markets to take their cue from Wall Street's moves on Friday. In Hong Kong, the benchmark Hang Seng Index opened down eight points, or 0.04 percent, at 23,963. The tech index slid 19 points, or 0.47 percent, to 4,138 while the China Enterprises Index inched nine points, or 0.12 percent, down to 8,021. Data last week showed US job growth slowed more than expected in September and the nonfarm payrolls count for the prior two months was revised sharply lower, almost taking another rate hike from the Fed this month off the table. "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. Investors are now pricing in just ⁠a 22 percent chance that the Fed could raise rates this month, as compared to a 64 percent chance ⁠a week ago, according to the CME ⁠FedWatch tool. The growing prospect of a Fed pause this month helped the Nikkei in Tokyo open with a surge of 804 points, or 1.18 percent, to 69,113, and the 22 benchmark kept on going after that to be 1,656 points up at one stage before noon. In Brazil, markets there are expected to jump later in the day after it became clear that Brazilian Senator Flavio Bolsonaro will face President Luiz Inacio Lula da Silva in the runoff of a presidential election, doing better than expected in the first round of voting. A recent selloff in ⁠global bonds hit pause on Monday, with benchmark 10-year US Treasury yields retreating slightly to 5.2643 percent while two-year yields stood at 4.8143 percent. While yields fell slightly in the wake of the US jobs data, they closed higher on Friday as the report did not rule out further Fed rate hikes in the coming months. Still, yields across major economies remain near multi-year highs, as bond prices come under pressure from deteriorating government finances, a glut of issuance and elevated energy costs. Cedric Lam, senior investment strategist at Standard Chartered, said that while recent US data has started to show softer-than-expected inflation, "market technicals" are likely temporarily delaying a move lower in bond yields, due to forced selling among hedge funds and real estate investment trusts. "Nevertheless, we do not expect this to be an ⁠extended selloff. We have initiated an opportunistic bullish idea on US 10-year government bonds," he added. The dollar was meanwhile on shaky ground owing to the reduced Fed hike expectations, with the euro bouncing from a 17-month low to US$1.1243 while sterling ticked slightly higher to US$1.3241. Against the yen, the greenback was down marginally at 157.81. "Tighter policy elsewhere and a growing case for an October Fed pause are US dollar headwinds. But US growth outperformance and strong foreign appetite for US securities keep US dollar risks skewed to the upside," said Elias Haddad, global head of markets strategy at BBH. In commodities, oil prices stayed elevated after Yemen's Iran-backed Houthis said they launched ⁠ballistic missiles and drones at Saudi Aramco sites in Riyadh and the Khurais area. (Reuters) Edited by Tony Sabine