Asian stocks rise as Fed rate hike bets ease

Asian shares climbed broadly on Monday as bets eased that the U.S. Federal Reserve would raise interest rates soon. The shift came after U.S. employers unexpectedly cut jobs in July while prior hiring figures were revised downward. The surprise slowdown in America’s labor market suggested the Fed might hold off on aggressive rate hikes, lifting risk appetite across regional markets.

The gains were capped, however, by fresh tensions in the Middle East. Iran warned it would not reopen the Strait of Hormuz unless the U.S. met specific demands, raising concerns about disruptions to global oil supplies. Oil prices had already surged over 5 percent in the past three sessions, but Brent crude futures held near $84 a barrel, showing little change overnight. Gold continued its rally, trading at $4,353 an ounce, its highest level in seven weeks, as investors sought safe havens amid uncertainty.

In Asia, markets showed mixed but mostly positive momentum. China’s Shanghai Composite rose 0.67 percent as weak inflation data deepened worries about deflation and raised expectations of more government stimulus. Consumer prices in China grew just 0.5 percent in July, missing forecasts, while producer prices rose 3.5 percent, slowing further from June. Hong Kong’s Hang Seng gained 1.05 percent, led by tech and financial stocks. Japan’s Nikkei jumped 2.08 percent to a near four-week high after minutes from the Bank of Japan’s July meeting revealed debate among policymakers over future rate hikes.

South Korea’s Kospi rebounded 0.65 percent, ending two days of losses as bets on a Fed pause grew. LG Energy Solution and Hyundai Motor were among the top gainers. Australia’s market slipped 0.33 percent, hurt by sharp drops in bank stocks ahead of the Reserve Bank’s policy decision due Tuesday. Westpac led the declines, falling 5.9 percent after reporting a drop in mortgage applications and warning of a potential slowdown in housing credit growth. Meanwhile, New Zealand’s market ended higher, snapping a two-session losing streak.

The dollar edged up from a two-month low against major currencies but stayed under pressure ahead of key U.S. inflation data due later in the week. A softer-than-expected jobs report has already reshaped expectations around Fed policy, potentially giving central banks in Asia more room to support their economies. Whether this calm persists may depend on whether geopolitical risks ease or escalate—and whether inflation data confirms the shift in U.S. labor market momentum.