(Bloomberg) — Stocks declined as investors waited on another round of US jobs numbers to gauge if they will back new bets for more Federal Reserve rate hikes.
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Shares in Europe slipped for a third day, dragged lower by utilities and media stocks as the regional benchmark headed for its worst week since the middle of March. US equity futures signaled more of the losses seen Thursday in the S&P 500 and Nasdaq 100 benchmarks after stronger-than-expected private hiring data. Asian stocks slid for a third day.
Traders added to wagers of more rate hikes after ADP Research Institute data on Thursday showed US companies added the most jobs in more than a year in June. Friday’s US nonfarm payrolls and unemployment reports will be key to any more revisions in rate-hike expectations after the ADP numbers prompted a spike in Treasury yields.
“If we get a consensus-type report, it is possible that the market takes yields off their extremes into the weekend,” ING Groep NV rates strategists led by Antoine Bouvet wrote in a note. “But we’d still maintain that there has been enough in the past few days of data for any pullback to be reversed next week, and for the push higher in yields to continue.”
Treasuries steadied in Friday trading, with the policy sensitive two-year yield near 5%, while the 10-year hovered close to the highest since March.
Swap contracts linked to the Federal Reserve’s future policy decisions almost fully price in a quarter-point interest-rate hike by July 26 and show a growing likelihood of an additional move by year-end. This expectation for higher rates is reinforcing bets on tighter monetary policy globally as central banks struggle to rein in inflation.
The US may not immediately see a cool-off in the labor market and the Fed will need to keep policy rates higher for longer to rein in inflation, according to Stuart Paul at Bloomberg Economics.
Dallas Fed President Lorie Logan voiced her concerns on Thursday that inflation was still running too hot and more tightening was needed. Policymakers elsewhere share that view, with European Central Bank President Christine Lagarde saying there is still “work to do” to bring inflation under control.
Back in Asia, shares of Alibaba Group Holding Ltd. jumped as much as 6.4% in Hong Kong after Reuters said Chinese authorities will wrap up a probe on Ant Group Co. as soon as Friday with a fine of more than $1.1 billion, capping years of scrutiny over the digital finance leader founded by Jack Ma.
US Treasury Secretary Janet Yellen held informal talks with China’s former Vice Premier Liu He and the People’s Bank of China governor Yi Gang as she began two days of talks designed to stabilize fraught ties between the two superpowers.
Investors also remained on the lookout for any stimulus decision by the Chinese government after Premier Li Qiang pledged to “spare no time” in implementing a batch of targeted policies to strengthen the country’s economic recovery.
Key Events This Week:
US unemployment rate, nonfarm payrolls, Friday
ECB’s Christine Lagarde addresses an event in France, Friday
Some of the main moves in markets today:
Stocks
The Stoxx Europe 600 fell 0.2% as of 8:19 a.m. London time
S&P 500 futures fell 0.2%
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index fell 0.8%
The MSCI Emerging Markets Index fell 0.7%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0888
The Japanese yen rose 0.5% to 143.42 per dollar
The offshore yuan was little changed at 7.2540 per dollar
The British pound was little changed at $1.2743
Cryptocurrencies
Bitcoin fell 0.6% to $30,133.21
Ether fell 1.4% to $1,857.79
Bonds
The yield on 10-year Treasuries was little changed at 4.03%
Germany’s 10-year yield was little changed at 2.63%
Britain’s 10-year yield declined one basis point to 4.65%
Commodities
Brent crude rose 0.7% to $77.08 a barrel
Spot gold rose 0.2% to $1,914.34 an ounce
This story was produced with the assistance of Bloomberg Automation.
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Source: https://finance.yahoo.com/news/asia-equities-primed-losses-yields-223829921.html