European Stocks Futures Gain Before US Jobs Data: Markets Wrap

(Bloomberg) — European and US stock futures gained in line with Asian equities ahead of US jobs data that will identify the path ahead for interest rates. An oil price rally eased after Middle East tensions led to the biggest one-day jump in almost a year.

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Euro Stoxx 50 futures rose 0.2%, and contracts on the S&P 500 advanced 0.1%. Equities in Japan and South Korea rose while markets in mainland China were shut for a holiday. A gauge of Chinese shares in Hong Kong advanced as traders assessed its recent rally’s sustainability and await details of fiscal stimulus and holiday spending.

An index of dollar declined marginally, but is still poised for the biggest weekly gain in nearly six months as traders pared back expectations for aggressive US rate cuts. Treasuries were flat after selling off on Thursday, increasing yields to levels not seen since September.

West Texas Intermediate and Brent crude eased slightly after each rose more than 5% to a one-month high on Thursday. Earlier gains came after puzzling comments from President Joe Biden, who told reporters the US was discussing whether to support potential Israeli strikes against Iranian oil facilities.

Investors are concerned that, should Israel strike critical Iranian assets, the Islamic Republic will lash out and escalate the conflict, dragging in more countries and potentially disrupting global energy shipments. Israel said it bombed more than a dozen Hezbollah targets in Beirut on Thursday.

“The market fear is that there could be supply disruptions coming out of Iran,” said Tai Hui, chief Asia market strategist for JPMorgan Asset Management, on Bloomberg Television. “Demand for oil should remain healthy, but at the same time the risk to the supply side is very much there.”

The initial buying frenzy in Chinese stocks after Beijing’s stimulus is waning as traders take profit and await policy details and holiday spending data for further confidence. Invesco Ltd.’s chief investment officer for Hong Kong and China, Raymond Ma, who predicted double-digit returns in Chinese equities this year, said there are signs the surge has gone too far for some stocks. Still, strategists at HSBC Holdings Plc and BlackRock Inc. are among Wall Street heavyweights turning bullish on the once beaten-down market.

The yen strengthened 0.6% against the dollar, paring some of its recent losses from earlier this week after Japanese Prime Minister Shigeru Ishiba had said the nation isn’t ready for another interest-rate increase.

Amid all the geopolitical uncertainty, investors are looking for further signals on the health of the US economy, with the monthly payrolls report due on Friday. The unemployment rate is forecast to hold steady at 4.2% in September while payrolls are expected to rise by 150,000.

“If the unemployment rate ticks up, I wouldn’t be surprised that markets would shift back toward expecting 50 basis points and then it is a question of how the Fed may react,” Kallum Pickering, chief economist at Peel Hunt, said on Bloomberg Television.

Other economic signs showed robustness in the US economy. The Institute for Supply Management’s index of services posted its best reading since February 2023, ahead of Wall Street estimates. Applications for US unemployment benefits rose slightly last week to a level that is consistent with a limited number of layoffs. Continuing claims, a proxy for the number of people receiving benefits, were little changed from the previous week.

“The US dollar could stay supported on safe haven demand amid Middle East risks, and more so if US payrolls surprise on the upside,” Wei Liang Chang, a foreign-exchange and credit strategist at DBS Bank Ltd., wrote in a research note. “The yen may be a beneficiary too, as geopolitical risks restrain appetite for carry trades”

Key events this week:

Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 6:34 a.m. London time
Nikkei 225 futures (OSE) were little changed
Japan’s Topix rose 0.3%
Australia’s S&P/ASX 200 fell 0.7%
Hong Kong’s Hang Seng rose 2.2%
Euro Stoxx 50 futures rose 0.2%
Nasdaq 100 futures rose 0.1%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.1030
The Japanese yen rose 0.6% to 146.11 per dollar
The offshore yuan fell 0.2% to 7.0571 per dollar
The Australian dollar was little changed at $0.6846
The British pound was little changed at $1.3134

Cryptocurrencies

Bitcoin rose 0.6% to $61,156.99
Ether rose 1.5% to $2,376.85

Bonds

Commodities

West Texas Intermediate crude fell 0.1% to $73.62 a barrel
Spot gold rose 0.4% to $2,666.99 an ounce

This story was produced with the assistance of Bloomberg Automation.