Asian stocks saw significant gains on Monday, October 5, 2026, following the release of US labor market data that showed a larger-than-expected slowdown. This reduced the likelihood of the US Federal Reserve raising interest rates further, boosting technology shares and easing pressure on bond markets. The MSCI Asia-Pacific index rose 1.1%, while Japan's Nikkei index jumped 2.6% to 70,074 points, driven by technology shares.
The positive momentum in Asian markets was fueled by the US jobs report released on Friday, which indicated that employers added fewer jobs in September than economists had forecast, along with a slowdown in wage growth. This led market participants to reassess the probability of a US interest rate hike in October, which fell below 25%. As a result, US Treasury yields declined, with the 10-year yield dropping 2 basis points to 5.25%.
In Japan, the Nikkei 225 index surged 2.6%, while the Topix index rose 1%, as technology shares benefited from improved investor risk appetite. Shares of Taiwan Semiconductor Manufacturing Company (TSMC) gained 3% following reports of a potential collaboration with Elon Musk's project, contributing to the rally in the semiconductor sector.
The upbeat sentiment in Asian markets was also driven by the record close of the Nasdaq 100 index on Friday, which reinforced optimism about AI-related investments. Japanese stocks outside the technology sector also saw gains, with Nippon Paint rising 1% after agreeing to acquire Akzo Nobel's Southeast Asian unit for $1.35 billion.
In other Asian markets, Hong Kong's Hang Seng index declined 0.4%, while Singapore's Straits Times index edged up 0.3%. Australia's S&P/ASX 200 index rose 0.3%, and Thailand's SET index gained 0.5%. Malaysia's KLCI index saw marginal gains, while India's Nifty 50 futures remained largely unchanged.
The combination of slower US labor market growth, lower bond yields, and renewed strength in technology shares improved investor risk appetite in Asian markets. However, markets remain vulnerable to new fluctuations amid elevated long-term yields, concerns about European bond markets, and ongoing geopolitical risks.
The current market dynamics reflect a delicate balance between optimism about the economic outlook and concerns about inflation and interest rates. As investors continue to assess the implications of the US labor market data and the potential for future interest rate moves, Asian markets are likely to experience ongoing volatility.
Key points
- Asian stocks rose on Monday, driven by technology shares and reduced expectations of a US interest rate hike.
- The MSCI Asia-Pacific index rose 1.1%, while Japan's Nikkei index jumped 2.6% to 70,074 points.
- The US jobs report released on Friday indicated that employers added fewer jobs in September than economists had forecast.
