Stocks upbeat as Fed rate hike bets recede

Monday began with a robust opening for stocks, as bonds remained stable. Investors adjusted their expectations of aggressive monetary tightening from the Federal Reserve following weaker-than-anticipated US employment figures. In the previous week, job growth in the US had slowed more than anticipated in September, and the nonfarm payrolls count for the preceding two months was revised downwards significantly.

These revisions have nearly eliminated the likelihood of a rate hike this month, according to Jose Torres, a senior economist at Interactive Brokers. Now, the probability of a Fed rate increase this month stands at just 22%, down from 64% a week earlier, as per the CME FedWatch tool.

Asian markets were relatively subdued on Monday due to holidays in China, South Korea, and Australia's New South Wales. The absence of market activity allowed Wall Street's performance, observed on Friday, to influence trading decisions. Data from last week revealed a slower-than-expected job market in September, and the nonfarm payrolls from the previous two months were revised sharply downwards, suggesting that the Fed may not raise rates another 100 basis points from the current level.

Torres explained that the growing likelihood of a Fed pause could help lift Japan's Nikkei by 2% early on, while Australian stocks gained 0.5% and MSCI's Asia-Pacific index outside Japan rose 0.15%. The broadest regional index also saw a 0.15% increase.

In the commodities market, oil prices remained elevated following Yemen's Iran-backed Houthis' reported missile and drone attacks on Saudi Aramco facilities in Riyadh and the Khurais area. Brent crude futures remained stable at $102.20 per barrel, while US crude oil was at $90.75 a barrel. Spot gold prices were up 0.3%, trading at $4,154.32 an ounce.