Hang Seng Index Rises Amid US Jobs Report and Tech Stock Rally

US Equity Markets Surge on US Jobs Data

On Friday, October 4, the US Equity Markets reversed their weekly losses. The highly anticipated US Jobs Report drove demand for riskier assets, countering concerns about the escalation in the Middle East conflict. The Nasdaq Composite Index rallied by 1.22%, while the Dow and the S&P 500 gained 0.81% and 0.90%, respectively.

US Jobs Report Fuels ‘No Landing’ Bets

On Friday, the US Jobs Report fueled bets the US could avoid an economic downturn. The US unemployment rate unexpectedly dropped from 4.2% in August to 4.1% in September, while nonfarm payrolls surged by 254k.

After the report, the probability of a 50-basis point November Fed rate cut fell to 0%. However, expectations of a 25-basis point Fed rate cut and signs of a resilient US economy boosted demand for riskier assets. Friday’s US equity market gains set the tone for the Monday Asian session.

Expert Views on the US Labor Market

Shane Oliver, Head of Investment Strategy and Chief Economist at AMP, commented on the US Jobs Report, stating,

“Strong Sep US jobs with payrolls +254k, prior mths +72k, unemp fell to 4.1% & av hrly earnings +0.4%m/+4%y (from +3.9%y). Leading jobs indicators still point to a softer labour mkt ahead, but the resilience so far leaves the Fed on track for -0.25% in Nov.”

Middle East Tensions Add to Market Uncertainty

Concerns about a possible escalation of the Middle East conflict remain a headwind for riskier assets. An increasing threat of a wider regional conflict could trigger a flight to safety, impacting demand for equities. WTI oil prices could reflect investor sentiment toward the Middle East conflict. Another surge in crude oil prices could pressure Asian stocks.

On Monday, WTI crude was down 0.27% to $74.18 after last week’s 9% surge.

Hang Seng Index Advances on the Final Day of the National Holiday

In Asia, the Hang Seng Index rose by 0.71% early on Monday, October 7. Investors reacted to Friday’s US Jobs Report and US equity market gains. Tech sector stocks extended their gains from Friday.

The Hang Seng Tech Index (HSTECH) rallied 2.28%. Notable tech stock movers included Semiconductor Manufacturing Intl. Co. (0981), surging by 16.64%. Tencent (0700) advanced by 0.84%.

However, real estate stocks capped the morning gains, with The Hang Seng Mainland Properties Index (HMPI) down 0.60%.

Mainland China’s markets remained closed for the National Holiday, though the FTSE China A50 futures index jumped by 209 points.

Nikkei Index Rallies on BoJ Rate Path Expectations

Meanwhile, the Nikkei 225 rallied by 1.97% on Monday morning on expectations of a more dovish Bank of Japan. Last week, the USD/JPY pair surged by 4.57% to 148.656, reflecting falling bets on a Q4 2024 BoJ rate hike. A weaker Yen could boost earnings for export-focused Japanese stocks.

Sony Corp. (6758) advanced by 4.01%, while Fast Retailing Co. Ltd. (9983) gained 3.15%. Nissan Motor Corp. (7201) was up by 1.57%.

ASX 200 Tracks the US Equity Markets Higher

The ASX 200 Index was up by 0.53% on Monday morning, tracking Friday’s US equity market trends. Banking and mining sector stocks offset losses from gold and oil stocks.

Westpac Banking Corp. (WBC) rallied 1.82%, while National Australia Bank (NAB) advanced by 1.72%. Dip buyers likely fueled the morning gains after Aussie banks suffered extended losses last week on expectations of a less dovish Fed rate path.

Mining giants BHP Group Ltd. (BHP) and Fortescue Ltd. (FMG) were up by 0.43% and 2.13%, respectively. Market sentiment toward China’s recent policy measures continued to push mining stocks higher on expectations of higher demand. On the SGX, iron ore futures rose by 1.62%, following a 16.25% surge the previous week.

Investors should remain alert, focusing on the central banks and the Middle East. Closely monitor news wires, real-time data, and expert commentary to adjust your trading strategies accordingly. Stay informed with our latest news and analysis to manage positions across the Asian equity markets.