European stocks rose as traders prepared for a US payrolls report forecast to show employers slowed hiring last month, potentially easing pressure on the Federal Reserve to raise interest rates again.
(Bloomberg) — European stocks rose as traders prepared for a US payrolls report forecast to show employers slowed hiring last month, potentially easing pressure on the Federal Reserve to raise interest rates again.
Miners were among the best performers in Europe’s Stoxx 600 index after news that a Chinese iron-ore buying agency was in talks with global suppliers. Royal Philips NV plunged as much as 10% after agreeing to further testing on certain sleep and respiratory care devices.
US equity futures ticked higher after the S&P 500 fell 0.1% Thursday and the tech-heavy Nasdaq 100 slipped 0.4%, though both were well off their lows. A gauge of Asian shares climbed, heading for its first back-to-back gain in three weeks. Chinese markets remain shut for a weeklong holiday.
The nonfarm payrolls report will show US employers hired 170,000 workers last month, down from 187,000 in August, a Bloomberg survey showed. Job data earlier this week provided a discordant narrative: job-openings overshot estimates, while a measure of private employment from ADP was weaker than forecast.
“Although both numbers haven’t been moving in tandem recently, the lower-than-expected ADP figures have given markets hope that September nonfarm payrolls will surprise to the downside,” said Julien Lafargue, chief market strategist at Barclays Private Bank. “Beyond the number of job creations, investors will pay close attention to wage growth figures and whether they confirm recent disinflationary trends.”
Treasury yields extended their advance, with the 10-year adding two basis points to 4.74% after reaching 4.88% earlier this week. A gauge of dollar strength was little changed.
“Friday’s payrolls data, and next week’s inflation number, will decide whether the 10-year Treasury yield goes up to 5% or down to 4.5%,” said Kenneth Broux, a strategist at Societe Generale in London. A higher-than-forecast jobs number may trigger “another wave of dollar-buying and bond-selling,” he said.
Traders have record sums riding on the outcome of November’s Fed meeting as investors and policymakers debate the likelihood of a further rate increase this year. San Francisco Fed President Mary Daly, who doesn’t vote on the Fed’s rate-setting committee this year, said the central bank may keep rates on hold if inflation and the jobs market cool.
Beaten-down bonds will make a comeback in 2024 when higher interest rates send the economy into a recession, according to Bank of America Corp.’s Michael Hartnett.
Once the recession being priced by bond and stock markets “mutates into economic data, bonds rally big and bonds should be the best performing asset class in the first half of 2024,” Hartnett wrote in a note.
Key events this week:
- China has week-long holiday
- Germany factory orders, Friday
- US unemployment rate, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.5% as of 9:11 a.m. London time
- S&P 500 futures rose 0.1%
- Nasdaq 100 futures rose 0.2%
- Futures on the Dow Jones Industrial Average rose 0.1%
- The MSCI Asia Pacific Index rose 0.5%
- The MSCI Emerging Markets Index rose 0.7%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was unchanged at $1.0550
- The Japanese yen fell 0.3% to 148.91 per dollar
- The offshore yuan was little changed at 7.3074 per dollar
- The British pound was little changed at $1.2200
Cryptocurrencies
- Bitcoin rose 0.6% to $27,655.58
- Ether rose 1.1% to $1,634.35
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.74%
- Germany’s 10-year yield advanced three basis points to 2.90%
- Britain’s 10-year yield advanced two basis points to 4.56%
Commodities
- Brent crude rose 0.4% to $84.42 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Sagarika Jaisinghani and Richard Henderson.
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