European stock futures gain ahead of US jobs data: Markets close

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European stock futures gain ahead of US jobs data: Markets close

(Bloomberg) — European and U.S. stock futures gained in line with Asian stocks, ahead of U.S. jobs data that will set the way forward for interest rates. A rally in oil prices eased after tensions in the Middle East led to their biggest one-day gain in nearly a year.

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

A dollar index fell marginally but is still poised for its biggest weekly gain in nearly six months as traders cut expectations of aggressive U.S. interest rate cuts. Treasuries were flat after a sell-off on Thursday, pushing yields to levels not seen since September.

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

Investors worry that if Israel strikes key Iranian assets, the Islamic Republic will attack and escalate the conflict, drawing in more countries and potentially disrupting global energy supplies. Israel said it bombed more than a dozen Hezbollah targets in Beirut on Thursday.

“The market’s fear is that there could be supply disruptions from Iran,” Tai Hui, chief Asia market strategist for JPMorgan Asset Management, told Bloomberg Television. “Oil demand should remain healthy, but at the same time, the risk to the supply side is very high.”

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

The yen strengthened 0.6 percent against the dollar, paring some of the recent losses from earlier this week, after Japanese Prime Minister Shigeru Ishiba said the nation was not ready for another interest rate hike.

Amid all the geopolitical uncertainty, investors are looking for further signals about 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 percent in September, while payrolls are expected to rise by 150,000.

“If the unemployment rate goes up, I wouldn’t be surprised if the markets would go back to expecting 50 basis points and then it’s a question of how the Fed might react,” Kallum Pickering, chief economist at Peel Hunt, told Bloomberg. Television.

Other economic signs showed robustness in the US economy. The Institute for Supply Management’s services index posted its best reading since February 2023, ahead of Wall Street estimates. US jobless claims 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 remain supported by haven demand amid Middle East risks, and even more so if US payrolls surprise higher,” wrote Wei Liang Chang, an FX and credit strategist at DBS Bank Ltd., in a research note. . “The yen may also be a beneficiary as geopolitical risks limit appetite for shipping deals”

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