• Global markets rallied and the U.S. dollar peaked against the yen following positive U.S. labour data.
• The data led to a reduction in bets for aggressive Federal Reserve rate cuts and influenced the crude oil market.
• Asian equity markets saw gains, with Japan's Nikkei leading with a 2% rally, and the U.S. dollar reached a seven-week high against the yen.
• The market shift impacted various sectors, highlighting the interconnectedness of global economies and the implications of U.S. economic performance.

Global markets experienced a significant shift on Monday, as Asian stocks rallied and the U.S. dollar reached a seven-week peak against the yen. This surge was primarily driven by the release of U.S. labour data, which dispelled fears of a recession and led to a sharp reduction in bets for aggressive rate cuts by the Federal Reserve.

The U.S. non-farm payrolls report, released on Friday, revealed that the economy unexpectedly added the most jobs in six months in September. This positive data spurred a rise in short-term U.S. Treasury yields and led to a significant shift in market sentiment.

In response to the dollar's rise, Japan's top currency diplomat, Atsushi Mimura, stated that officials would monitor foreign exchange moves, including speculative trading. This statement reflects the global impact of the U.S. economic data and the potential implications for foreign exchange markets.

The U.S. labour data also influenced the crude oil market, with prices easing from a one-month peak. This occurred despite ongoing geopolitical tensions, including Israel's bombing of targets in Lebanon and the Gaza Strip, marking one year since the Hamas attack that triggered the war.

Asian Equity Markets and U.S. Dollar Performance

In the equity market, Japan's Nikkei led regional gains with a 2% rally, boosted by the softer yen. Australia's stock benchmark added 0.12%, and South Korea's Kospi gained 0.29%. Hong Kong's Hang Seng had yet to open, and mainland Chinese stocks remained closed for the Golden Week holiday.

The U.S. Dow futures pointed 0.08% higher after the cash index closed at an all-time peak following the release of the payrolls data. Kyle Rodda, a senior financial market analyst at Capital.com, noted that the market's reaction highlighted the current key themes and risks for market participants: economic growth and its impact on future earnings.

The U.S. dollar pushed as high as 149.10 yen for the first time since August 16 before last trading hands up 0.18% at 148.87 yen. The euro eased 0.07% to $1.0971, slipping back towards Friday's seven-week trough at $1.09515.

The strong U.S. jobs report also led to a significant shift in expectations for the Federal Reserve's next policy announcement on November 7. Bets for a super-sized 50-basis-point rate cut, which had been above 50% a week ago, were completely erased. Instead, traders now lay 95% odds on a quarter-point cut, with a small chance that the policy rate stays unchanged, according to CME Group's FedWatch Tool.

Corporate News and Market Predictions

In corporate news, shares of Saregama India were expected to trade actively on Monday, October 7, as the company was reportedly looking to acquire a majority stake in Dharma Productions. This move comes amidst the company's efforts to expand its presence in the entertainment industry.

Adani Wilmar reported a 10% total volume growth during the second quarter of this financial year, with its Food and FMCG segment seeing a 31% volume growth. The company has been expanding its distribution network to access more towns, reaching over 36,000 rural towns directly by the end of September 2024.

In the pharmaceutical sector, NATCO Pharma announced that Mylan Pharmaceuticals Inc. and Novo Nordisk have reached a settlement of the US patent litigation related to generic Ozempic (Semaglutide). NATCO and Mylan are partnered on the development of generic Ozempic products.

In the housing market, house prices in the UK bounced back further last month as lower mortgage rates fuelled a revival in the property market. The average home increased in value by 1.1% in December compared to November, according to the Halifax house price index.