Hints by the Federal Reserve last week that it has finished with its rate hiking has sparked a rally across global markets
Hints by the Federal Reserve last week that it has finished with its rate hiking has sparked a rally across global markets AFP

Markets rallied again Monday following another strong performance on Wall Street, as below-forecast US jobs data fanned optimism that the Federal Reserve had reached the end of its interest rate hiking cycle.

After a tough year for traders, the bank's decision last week to pause on monetary policy for a second meeting and hint that it would not tighten further has provided some much-needed vigour, and sparked talk of a new year cut.

Those hopes were given a boost Friday by figures showing far fewer jobs than expected were created in October, while other data pointed to a slowing economy, easing pressure on policymakers to lift rates further.

"The recent deluge of economic data does not paint a picture of an impending recession," said SPI Asset Management's Stephen Innes.

"Most economic indicators, aside from a notable miss in the ISM manufacturing index, did not signal a recession. Instead, the data seemed to align with a 'just right' scenario, akin to Goldilocks," he added, referring to data that was neither too strong nor too weak.

"The deceleration in job growth... mitigated the risk of overheating or an excessively rapid economic expansion, a key factor holding the Federal Reserve back from officially declaring that it has reached its terminal rate."

All three main indexes on Wall Street jumped Friday after the jobs reading, which also fuelled bets on an interest rate cut by June, while Treasury yields eased back from 16-year highs.

Observers now say the road is open for equities to end the year on a strong note.

Asian markets tracked the rally in New York, with Tokyo more than two percent higher, while Hong Kong, Wellington, Manila and Jakarta were up more than one percent.

There were also gains in Shanghai, Sydney, Singapore, Mumbai, Bangkok and Taipei.

Seoul piled on more than five percent after authorities reimposed a ban on short-selling.

London, Paris and Frankfurt rose at the open.

Still, analysts warned equity traders to remain vigilant.

"There's a bit more reason for investors to be more optimistic that the Fed is probably done with rate hikes, but one should not let one's guard down," Vasu Menon, at OCBC Bank Singapore, told Bloomberg Television.

"If the economy proves to be more resilient, if inflation proves to be more stubborn, bond yields could go up once again."

Expectations that the Fed would not lift rates any further also kept downward pressure on the dollar, with the yen holding its gains after rallying at the end of last week, having come within a whisker of a three-decade low.

Oil prices ticked higher after Saudi Arabia and Russia said they would continue with their output curbs into the new year.

Global benchmark Brent crude traded above $85 a barrel, while West Texas Intermediate was near $81.

The news came after the commodity fell more than six percent last week as investors grew optimistic that the Israel-Hamas conflict would not spill over into a wider war in the crude-rich Middle East.

Tokyo - Nikkei 225: UP 2.4 percent at 32,708.48 (close)

Hong Kong - Hang Seng Index: UP 1.7 percent at 17,966.59 (close)

Shanghai - Composite: UP 0.9 percent at 3,058.41 (close)

London - FTSE 100: UP 0.1 percent at 7,423.42

Dollar/yen: UP at 149.60 yen from 149.37 yen on Friday

Euro/dollar: UP at $1.0738 from $1.0733

Pound/dollar: UP at $1.2393 from $1.2381

Euro/pound: UP at 86.66 pence from 86.67 pence

West Texas Intermediate: UP 1.0 percent at $81.31 per barrel

Brent North Sea crude: UP 0.9 percent at $85.62 per barrel

New York - Dow: UP 0.7 percent at 34,061.32 (close)