Asian stocks rally as soft US jobs data ease Fed fears

Asian markets experienced a significant rally on Monday, following disappointing US jobs data that provided the Federal Reserve with additional flexibility to hold off on raising interest rates for the current month. The Federal Reserve's concerns over inflation were also alleviated by a further decline in oil prices. The market's movement mirrored a bullish sentiment on Wall Street, as all three major indexes saw substantial gains following the release of the non-farm payrolls report.

The US economy added just 29,000 jobs in September, significantly below the forecasted 90,000 jobs. Moreover, the figures for July were revised downwards, indicating job losses during that period. Following the report, investors promptly reduced their expectations of an interest rate hike, with the CME's FedWatch tool projecting a probability of 20 percent or less for a rate increase this month, down from over 65 percent earlier in the week.

The market's anticipation of at least one more rate hike this year due to September's increase had been pushing up borrowing costs, with the 10-year US Treasury yields reaching a 24-year high last week. However, the recent hiring trend has settled into a comfortable range of 40,000 to 60,000 jobs per month, according to Stephen Innes from SPI Asset Management. Despite still-high core PCE inflation, the shorter-term pulse of the economy has cooled considerably, he noted.

As rates are expected to remain unchanged for now, tech-focused markets reaped the benefits, as tech companies depend on debt to finance their extensive investments. Japanese stocks surged over two percent, reaching a record high of more than 70,000 points for the first time since July. Similarly, Taiwan's stocks rose by a comparable margin.