April 13, 2024
Finance

European Futures Fall Ahead of Key US Jobs Data: Markets Wrap


(Bloomberg) — European equity futures declined Friday while stocks across Asia were mixed as investors await the crucial US jobs data to gauge the timing and pace of the Federal Reserve’s interest rate cuts.

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The Euro Stoxx 50 contract fell 0.6%, while the US counterparts were little changed. Shares in Japan rose, helped by a weak yen. Equities in South Korea, Australia, mainland China and Hong Kong slipped. The Friday’s nonfarm payrolls data is expected to be strong, showing US employers added 175,000 jobs last month, with the so-called whisper number calling for an increase of 185,000 positions.

Traders pushed back bets on the timing of Fed’s pivot to lowering borrowing costs as strong US private jobs data released Thursday buoyed yields. Benchmark 10-year yields steadied around 4%-mark in Asia. The selloff can extend, according to James Wilson, a senior portfolio manager at Jamieson Coote Bonds Pty, if Friday’s jobs data underscores concerns that the market overpriced Fed’s rate reductions.

“In the lead-up to the upcoming US job numbers, sentiment is back to wait-and-see,” said Jun Rong Yeap, a strategist at IG Asia. “We may have to see a substantial weakening of the US labor market to justify market pricing of a rate cut as early as March.”

Traders are also watching for euro-zone inflation and producer prices data to be released Friday, which will help shape expectations for European Central Bank policy.

One large options trade, that expires Friday after the employment figures are released, targets a yield of as high as 4.15%. Swaps traders now see around a 65% chance the Fed will cut rates by the Fed’s March meeting, down from around 85% a week ago.

Veronica Clark, an economist at Citigroup, expects the report to dampen wagers on near-term cuts for January and March.

“Even with a recent loosening of financial conditions, risks for monthly job growth still skew more to the downside than upside, and markets are likely to be more reactive to weaker data,” she wrote.

That’s hurt gold, with the metal was poised for its first weekly drop in a month.

Yen Declines

The yen weakened slightly after lodging its second decline of almost 1% against the greenback Thursday, pushing the Japanese currency closer toward 145 per dollar. The move followed speculation the Bank of Japan will find it harder to dissolve negative interest rate policy following an earthquake earlier this week.

One measure shows, Chinese stocks have reached a level that historically leads to spectacular returns.

Oil edged higher, cementing a weekly gain, as simmering tensions in the Middle East and North Africa eclipsed signs of weakening US demand.

Key events this week:

  • Euro-zone CPI, PPI, Friday

  • US nonfarm payrolls/unemployment, factory orders, ISM services index, Friday

  • Richmond Fed President Tom Barkin — an FOMC voter in 2024 — speaks, Friday

Some of the main moves in markets:

Stocks

  • Euro Stoxx 50 futures fell 0.6%

  • S&P 500 futures were little changed as of 6:28 a.m. London time

  • Nasdaq 100 futures fell 0.1%

  • S&P/ASX 200 futures were little changed

  • Hong Kong’s Hang Seng fell 0.8%

  • The Shanghai Composite fell 0.9%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.1%

  • The euro fell 0.1% to $1.0929

  • The Japanese yen fell 0.4% to 145.14 per dollar

  • The offshore yuan fell 0.2% to 7.1759 per dollar

  • The Australian dollar fell 0.1% to $0.6697

  • The British pound was little changed at $1.2670

Cryptocurrencies

  • Bitcoin fell 1.8% to $43,668.31

  • Ether fell 1.3% to $2,246.48

Bonds

  • The yield on 10-year Treasuries advanced two basis points to 4.02%

  • Japan’s 10-year yield declined one basis point to 0.600%

  • Australia’s 10-year yield advanced eight basis points to 4.13%

Commodities

This story was produced with the assistance of Bloomberg Automation.

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