Stock Futures Signal Recovery Before US Jobs Data: Markets Wrap

Stocks gained with US index futures as traders prepared for a US payrolls report that could potentially ease pressure on the Federal Reserve to raise interest rates again.

(Bloomberg) — Stocks gained with US index futures as traders prepared for a US payrolls report that could potentially ease pressure on the Federal Reserve to raise interest rates again.

Insurers led gains in Europe’s Stoxx 600 index, after Aviva Plc was cited in a newspaper as a target for potential bidders. Prudential, Legal & General Group and Phoenix also rose. 

US equity futures ticked higher after the S&P 500 fell 0.1% Thursday and the tech-heavy Nasdaq 100 slipped 0.4%. Tesla Inc. slipped in premarket trading as the electric-vehicle maker cut prices on its most popular cars in the US.

The nonfarm payrolls report is forecast to show employers slowed hiring last month, with 170,000 jobs being added last month, down from 187,000 in August. 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.” 

A global bond selloff is hammering risk assets from stocks to corporate credit on concerns that central banks will keep interest rates elevated longer than expected. Thirty-year yields this week touched 5% for the first time since 2007.

Read: The 5% Bond Market Means Pain Is Heading Everyone’s Way

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

  • S&P 500 futures rose 0.2% as of 6:09 a.m. New York time
  • Nasdaq 100 futures rose 0.2%
  • Futures on the Dow Jones Industrial Average rose 0.2%
  • The Stoxx Europe 600 rose 0.7%
  • The MSCI World index rose 0.2%

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0560
  • The British pound rose 0.2% to $1.2212
  • The Japanese yen fell 0.3% to 149.00 per dollar

Cryptocurrencies

  • Bitcoin rose 0.8% to $27,697.5
  • Ether rose 1.1% to $1,634.87

Bonds

  • The yield on 10-year Treasuries advanced two basis points to 4.74%
  • Germany’s 10-year yield advanced two basis points to 2.90%
  • Britain’s 10-year yield advanced three basis points to 4.58%

Commodities

  • West Texas Intermediate crude rose 0.1% to $82.43 a barrel
  • Gold futures rose 0.1% to $1,834 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Sagarika Jaisinghani and Richard Henderson.

More stories like this are available on bloomberg.com

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