Markets settled into a holding pattern ahead of Friday’s key US jobs data, with European stocks and American equity-index futures edging higher, Treasury yields flat and a gauge of the dollar steady.
(Bloomberg) — Markets settled into a holding pattern ahead of Friday’s key US jobs data, with European stocks and American equity-index futures edging higher, Treasury yields flat and a gauge of the dollar steady.
Energy majors were the outperformers in the Stoxx Europe 600 index as crude oil headed for the biggest weekly advance since April. Miners jumped as China’s latest stimulus measures boosted prices of some industrial metals. Car makers declined, with Renault SA and Volkswagen AG falling more than 3% each after being downgraded to sell by UBS Group AG on increasing competition from Asia. Aurubis AG slumped as much as 18% after Europe’s top copper producer said it faces large losses due to a massive metal theft.
Futures on the S&P 500 and Nasdaq 100 rose about 0.3% and 0.2% respectively. Broadcom Inc. dropped as much as 4.6% in premarket trading after a muted revenue forecast.
Friday’s payrolls report may provide further evidence of slight cooling in the still-tight US labor market. The question is whether that will be enough to stall the Federal Reserve’s tightening cycle or even lead to early rate cuts. Meanwhile, a rapidly weakening economy is likely to tilt the European Central Bank in favor of a pause this month, with no further hikes beyond the current rate of 3.75%, according to Morgan Stanley economists.
“I’m personally more inclined toward the soft landing scenario given the resilience of the labor market and inflation slowing down, so I’m not expecting any catastrophic numbers this afternoon,” said Harry Wolhandler, head of equities at Meeschaert Asset Management in Paris. “In any event, should there be bad surprises, the Fed now has room for maneuver to lower rates.”
Elsewhere, China’s fresh efforts to rescue an ailing economy sent the MSCI Asia Pacific Index toward a second straight week of gains, the longest such streak since mid-June. The government will allow the nation’s largest cities to cut down payments for home buyers and encouraged lenders to lower rates on existing mortgages as well as on deposits. Meanwhile, Shanghai eased home-buying mortgage rules for residents.
Mainland China shares traded higher and metals looked set to extend this week’s advances. Hong Kong’s market was shut as the city braced for what may be the strongest storm to hit in at least five years.
The yuan also strengthened after China’s central bank reduced the foreign exchange reserve requirement ratio for financial institutions in a bid to support the currency. The currency has since pared its gains. Sentiment was further buoyed by an unexpected rise in manufacturing data that advanced to 51 in August, the highest reading since February, according to a Caixin survey.
Japan’s Topix index posted its eighth consecutive month of increase in August — the longest winning streak since 2013 — and the gauge was now set for the best weekly advance since October. Data earlier showed companies’ profits rose 11.6% on an annual basis in the second quarter.
In commodities, oil is set for a weekly gain after Russia signaled that it would extend export curbs and US inventories dropped further. Gold headed for the second weekly advance.
Key events this week:
- South African central bank governor Lesetja Kganyago, Atlanta Fed President Raphael Bostic, BOE’s Huw Pill, IMF’s Gita Gopinath on panel at the South African Reserve Bank conference, Friday
- Boston Fed President Susan Collins speaks at virtual event, Friday
- US unemployment, nonfarm payrolls, light vehicle sales, ISM manufacturing, construction spending, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.4% as of 6:44 a.m. New York time
- Nasdaq 100 futures rose 0.2%
- Futures on the Dow Jones Industrial Average rose 0.4%
- The Stoxx Europe 600 rose 0.4%
- The MSCI World index rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0846
- The British pound was little changed at $1.2676
- The Japanese yen was little changed at 145.48 per dollar
Cryptocurrencies
- Bitcoin fell 0.1% to $25,982.63
- Ether fell 0.4% to $1,642.05
Bonds
- The yield on 10-year Treasuries was little changed at 4.11%
- Germany’s 10-year yield advanced one basis point to 2.48%
- Britain’s 10-year yield advanced two basis points to 4.38%
Commodities
- West Texas Intermediate crude rose 1.2% to $84.64 a barrel
- Gold futures rose 0.2% to $1,970.30 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar and Sagarika Jaisinghani.
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