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Stocks, US Futures Edge Higher Before Jobs Numbers: Markets Wrap

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Stocks, US Futures Edge Higher Before Jobs Numbers: Markets Wrap

(Bloomberg) — European stocks and Wall Street equity futures crept higher as investors braced for US jobs data due later Friday that will help chart the path forward for Federal Reserve monetary tightening.

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The Stoxx Europe 600 Index rose 0.1%, while S&P 500 and Nasdaq 100 contracts posted similar gains. A gauge of Asian equities rose slightly.

Treasury 10-year yields steadied after their first gain of the week on Thursday following comments from Fed officials. The dollar was little changed, while the yen fell to levels not seen in a week, after the Bank of Japan unveiled further unscheduled bond buying to control its yield curve.

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The tentatively positive sentiment precedes US nonfarm payroll data later Friday. Estimates peg a decline in new jobs added, indicating a cooling in the labor market that would in turn reduce the need for higher interest rates. However, private payrolls figures out on Thursday surpassed estimates and a surprise drop in new claims for unemployment benefits underscored a robust jobs market.

“What the Fed really wants to see is some slack build up in the labor markets, in hopes it can do this gently without creating much of a downturn,” Raghuram Rajan, a former governor of India’s central bank, said on Bloomberg Television. “But it may well be that by the time it seems that it will have raised rates enough, that the momentum takes us down to a mild recession at the very least.”

Market pricing for US interest rates to peak in June increased to above 5% following comments from Atlanta Fed President Raphael Bostic, who said the central bank still has “much work to do” to tame inflation. St. Louis Fed President James Bullard, who is no longer a voting member of the Federal Open Market Committee, said rates were approaching a sufficiently restrictive zone and that inflation expectations had retreated, offering investors some optimism.

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There are increasing signs of pressure on technology companies, with Samsung Electronics Co. the latest to report on a demand slump resulting in a 69% plunge in operating profit. Shares in the South Korean giant rose as speculation mounted the hit to earnings would prompt the company to reduce capital expenditure.

Meanwhile, Citigroup Inc. strategists said European stocks are better prepared than their pricey US peers for a slide in earnings that’s set to take place this year. A team led by Robert Buckland raised European equities to overweight on Friday, saying valuations already discount a 15% drop in earnings. At the same time, they cut US shares to underweight on the grounds that earnings expectations are still too optimistic.

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Oil steadied after a string of declines that wiped nearly 10% from the price of crude. The price of gold increased after retreating Thursday from a six-month high reached earlier in the week.

Key events this week:

  • Eurozone retail sales, CPI, consumer confidence, Friday

  • Germany factory orders, Friday

  • US nonfarm payrolls, factory orders, durable goods, Friday

Some of the main moves in markets:

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Stocks

  • The Stoxx Europe 600 was little changed as of 8:23 a.m. London time

  • S&P 500 futures rose 0.1%

  • Nasdaq 100 futures were little changed

  • Futures on the Dow Jones Industrial Average rose 0.1%

  • The MSCI Asia Pacific Index rose 0.1%

  • The MSCI Emerging Markets Index rose 0.2%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0526

  • The Japanese yen fell 0.6% to 134.26 per dollar

  • The offshore yuan rose 0.3% to 6.8666 per dollar

  • The British pound was little changed at $1.1900

Cryptocurrencies

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  • Bitcoin fell 0.2% to $16,804

  • Ether fell 0.3% to $1,248.29

Bonds

  • The yield on 10-year Treasuries was little changed at 3.73%

  • Germany’s 10-year yield declined one basis point to 2.31%

  • Britain’s 10-year yield was little changed at 3.55%

Commodities

  • Brent crude fell 0.3% to $78.46 a barrel

  • Spot gold rose 0.4% to $1,839.73 an ounce

This story was produced with the assistance of Bloomberg Automation.

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–With assistance from Tony Jordan.

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©2023 Bloomberg L.P.

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