Asian equities logged their biggest intraday gains in nearly two weeks on Monday, with Taiwan stocks notching a record high after a softer-than-expected U.S. jobs report tempered expectations of near-term Federal Reserve policy tightening.
The MSCI emerging markets Asia equities index rose as much as 1.4%, while the EM currencies gauge ticked up 0.3% to hit its highest since September 23.
Data released last week showed US job growth slowed more than expected in September, while nonfarm payroll figures for the previous two months were revised sharply lower, further dampening expectations of a Fed rate hike this month.
"What's worth noting is that even after the sharply weaker payrolls print, interest rate swap markets remain close to fully pricing in a 25-basis-point hike before year-end. That means markets are not trading the end of the hiking cycle - they're trading a delay in the next move," said Dilin Wu, research strategist at Pepperstone.
Swaps imply a 17.7% chance that the Fed could raise its rate later this month. However, the odds rise to 68.7% for an increase in December, according to CME's FedWatch tool.
"The falling rate-hike bets are mechanical relief for Asian risk assets in the near term - lower U.S. yields narrow the rate differential pressure that's been pulling capital toward the dollar all year... for equities, that supports a near-term bounce, particularly in rate-sensitive sectors like tech," Wu said.
Taiwan stocks advanced as much as 2.7% to a lifetime high of 49,770.66. The tech-heavy bourse alone makes up about a quarter of the MSCI regional equities gauge. Semiconductor major TSMC surged as much as 3.2% to a record high.
Malaysian and Philippine shares were among the region's other top gainers, up 0.6% and 0.5%, respectively.
South Korea's stock market was closed for a public holiday.
On the currency front, the Taiwan dollar, sensitive to energy prices, hit its highest in more than a week.
The Indonesian rupiah, the worst-performing currency in the region, slipped 0.2%, inching closer to the key 18,000 mark.
In Brazil, right-wing Senator Flavio Bolsonaro will face leftist President Luiz Inacio Lula da Silva in a runoff of the presidential election later this month, after he exceeded expectations in Sunday's first-round vote with a slight lead over the incumbent.
The election, which centered on the cost of living, corruption and insecurity in Brazilians' daily lives, follows a string of wins across Latin America by right-wing parties aligned with US President Donald Trump.
The Brazilian real ended Friday higher at 5.2132 per US dollar. The currency, however, hovered near its mid-August low of 5.2223.
HIGHLIGHTS:
** Indonesia's 10-year bond yield steady at 7.160%
** Japan's Nikkei share average rises above 70,000 on AI boost
** International Monetary Fund and Sri Lanka strike staff-level pact on funding of $345 million - Reuters
