Key facts
- Asian stock markets rose, following Wall Street's lead.
- A weaker-than-expected U.S. jobs report reduced expectations of an immediate Federal Reserve interest rate hike.
- Oil prices increased due to ongoing uncertainty and lack of progress in Gulf peace talks.
- Brent crude rose 0.6% to $84.04 per barrel, and U.S. crude increased 0.5% to $78.56 per barrel.
- The market's probability of a September Fed rate hike decreased significantly.
Asian share markets advanced, mirroring gains on Wall Street, as a softer-than-expected U.S. jobs report eased concerns about an imminent interest rate hike by the Federal Reserve. The U.S. July consumer price report, due Wednesday, is now under closer scrutiny, with analysts forecasting modest increases in headline and core inflation.
Oil prices saw a slight increase due to a lack of progress in Gulf peace talks and ongoing confusion regarding shipping lanes in the Strait of Hormuz. Iran indicated a deal with Oman was nearing completion but stressed that the waterway's reopening was contingent on the U.S. meeting other conditions. Brent crude rose 0.6% to $84.04 a barrel, and U.S. crude climbed 0.5% to $78.56 a barrel.
The reduced risk of a near-term Fed hike supported Treasury bonds and contributed to Wall Street's record highs. Japan's Nikkei index gained 2.0%, and South Korea's market rose 0.8%. The MSCI Asia-Pacific index ex-Japan edged up 0.7%. Chinese stocks, however, declined 0.7% following July inflation data that undershot forecasts, highlighting weak domestic demand.
In Europe, futures for the EUROSTOXX 50 and DAX were flat, while FTSE futures dipped 0.4%. U.S. equity futures showed modest gains, with S&P 500 futures up 0.1% and Nasdaq futures up 0.3%, following a strong week driven by corporate earnings. Analysts noted significant year-on-year earnings growth, particularly in AI-related stocks, leading JPMorgan to raise its 2026 EPS estimate and S&P 500 price target.
Bond markets saw 10-year Treasury yields slightly higher at 4.662% ahead of substantial new issuance. The U.S. dollar weakened broadly against major currencies, with the euro reaching a seven-week high against the dollar. The dollar also gained against the yen, though intervention fears persist. Meanwhile, Bank of Japan policymakers signaled potential for faster-than-expected rate increases due to inflation risks. Gold prices held steady around $4,333 an ounce.