US employment growth fell short of market expectations, causing rate-hike expectations to recede. In Tokyo trading on Monday, the Nikkei 225 was poised to recover the ¥70,000 level, while futures remained at elevated levels.
All 3 major US indices rose at the end of the previous week, and concerns about higher US interest rates eased after US employment data fell short of market expectations. In response, CME Nikkei 225 futures traded above the daytime close on the Osaka Exchange, and the Nikkei 225 moved toward a recovery of the ¥70,000 level.
In the September employment report released by the US Department of Labor, nonfarm payrolls rose by just 29,000 from the previous month, while the combined downward revision for July and August was 60,000. The unemployment rate was 4.2%, indicating a slowdown in the labor market and contributing to the retreat in expectations for higher interest rates.
Crude oil prices fell. Reports that the G7 had decided to release strategic reserves sent crude oil futures lower. Concerns about the impact of persistently high energy costs on corporate earnings and personal consumption eased, helping prompt buying across a broad range of stocks.
In the foreign exchange market, the dollar-yen rate traded in the upper ¥157 range per dollar. The move toward a weaker yen raised expectations for improved earnings at export-related companies.
Yen-denominated Nikkei 225 futures closed at ¥69,910 and dollar-denominated futures at ¥69,935, suggesting the index could move into the ¥70,000 range soon after the opening. The previous week's close was ¥68,309.46.