Europe, US Futures Rise Ahead of CPI and Jobs Data: Markets Wrap

(Bloomberg) — European and US equity futures rose alongside broad gains across Asia ahead of American jobs and eurozone inflation data that will help chart the path forward for central bank monetary tightening.

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Contracts for the Euro Stoxx 50 and S&P 500 gained after the US index fell 1.2% Thursday. Shares in Japan, South Korea and Australia increased. Stocks in China and Hong Kong fluctuated after initially rallying on news reports Chinese officials would remove restrictions on property developer borrowing.

Treasury 10-year yields retreated slightly after their first gain of the week on Thursday following comments from Fed officials. The dollar steadied and the yen fell to levels not seen in a week, after the Bank of Japan unveiled further unscheduled bond buying to control its yield curve.

The broadly positive sentiment precedes US nonfarm payroll data to be released Friday. Estimates peg a decline in new jobs added, indicating a cooling in the labor market that would in turn reduce the need for higher interest rates. However, private payrolls data released Thursday surpassed estimates and a surprise fall in new claims for unemployment benefits underscored a robust jobs market.

“What the Fed really wants to see is some slack build up in the labor markets, in hopes it can do this gently without creating much of a downturn,” Raghuram Rajan, a former governor of India’s central bank, said on Bloomberg Television. “But it may well be that by the time it seems that it will have raised rates enough, that the momentum takes us down to a mild recession at the very least.”

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Market pricing for US interest rates to peak in June increased to above 5% following comments from Atlanta Fed President Raphael Bostic, who said the central bank still has “much work to do” to tame inflation. St. Louis Fed President James Bullard, who is no longer a voting member of the Federal Open Market Committee, said rates were approaching a sufficiently restrictive zone and that inflation expectations had retreated, offering investors some optimism.

There are increasing signs of pressure on technology companies, with Samsung Electronics Co. the latest to report on a demand slump resulting in a 69% plunge in operating profit. Shares in the South Korean giant rose as speculation mounted the hit to earnings would prompt the company to reduce capital expenditure.

The rise in European stock futures comes ahead of eurozone consumer price index data due later today. Consensus forecasts suggest inflation fell to 9.5% in December from a year earlier, down from 10.1% recorded in November.

Oil rose further after a string of declines that wiped nearly 10% from the price of crude. The price of gold increased after retreating Thursday from a six-month high reached earlier in the week.

Key events this week:

Eurozone retail sales, CPI, consumer confidence, Friday
Germany factory orders, Friday
US nonfarm payrolls, factory orders, durable goods, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.3% as of 3:20 p.m. Tokyo time. The S&P 500 fell 1.2%
Nasdaq 100 futures rose 0.3%. The Nasdaq 100 fell 1.6%
Japan’s Topix index rose 0.4%
Hong Kong’s Hang Seng fell 0.3%
The Shanghai Composite rose 0.2%
Euro Stoxx 50 futures rose 0.7%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0520
The Japanese yen fell 0.4% to 134.00 per dollar
The offshore yuan rose 0.4% to 6.8592 per dollar

Cryptocurrencies

Bitcoin fell 0.2% to $16,803.89
Ether fell 0.3% to $1,247.75

Bonds

The yield on 10-year Treasuries was little changed at 3.71%
Japan’s 10-year yield advanced seven basis points to 0.50%
Australia’s 10-year yield declined two basis points to 3.82%

Commodities

West Texas Intermediate crude rose 0.8% to $74.25 a barrel
Spot gold rose 0.3% to $1,839.12 an ounce

This story was produced with the assistance of Bloomberg Automation.