(Bloomberg) — European and U.S. stock futures slumped ahead of key U.S. jobs data that could shed light on the direction of interest rates. Oil prices extended their gains as traders tracked the escalating fighting in the Middle East.
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Europe’s Stoxx 600 index rose 0.2% as energy stocks rose. The S&P 500 index was flat. U.S. Treasuries were firm after selling on Thursday, but the dollar strength index posted its biggest weekly gain in nearly six months as bets on aggressive U.S. interest rate cuts diminished.
While investors are keeping an eye on geopolitical uncertainty, they are also evaluating signals about the health of the U.S. economy ahead of the release of the monthly payroll report on Friday. The unemployment rate is expected to remain flat at 4.2% in September, while the number of employed people is expected to increase by 150,000.
“Anything that suggests growth is stabilizing or reaccelerating will force the market to reconsider the current aggressive pricing of rate cuts,” said Robert Tipp, chief investment strategist at PGIM Fixed Income. .
Bank of America strategist Michael Hartnett said if the report is within market expectations, risk assets are likely to rise.
Hartnett said in a note that the addition of 125,000 to 175,000 jobs last month should support a soft economic landing, keep bond yields within range and trigger risk-on trading.
The strategist said an “explosive” jobs report with more than 225,000 employees and an unemployment rate below 4.1% would push the 30-year Treasury yield above 4.5%. On the other hand, if the number of employed people falls below 75,000 and the unemployment rate rises above 4.3%, it is a “recession.”
West Texas Intermediate and Brent crude oil rose after surging more than 5% on Thursday. The United States and its allies warned of an “uncontrollable escalation” in the Middle East after Israel carried out heavy bombing raids near Beirut airport overnight targeting Hezbollah commanders and facilities.
In individual stocks, European shipping stocks fell after U.S. longshoremen agreed to end a three-day strike that has paralyzed trade on the East Coast and Gulf Coast. Maersk A/S fell 6.8% and Hapag-Lloyd AG fell 13%. Stock prices had risen on expectations that the strike would lead to higher container rates.
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This week’s main events:
The main movements in the market are:
stock
As of 10:21 a.m. London time, the Stoxx European 600 was up 0.2%.
S&P500 futures little changed
Nasdaq 100 futures little changed
Dow Jones Industrial Average futures little changed
MSCI Asia Pacific Index rose 0.3%
MSCI Emerging Markets Index rose 0.3%
currency
Bloomberg Dollar Spot Index little changed
The euro was almost unchanged at $1.1021.
The Japanese yen rose 0.3% to 146.44 yen to the dollar.
The offshore yuan fell 0.2% to 7.0635 yuan to the dollar.
The British pound rose 0.2% to $1.3147.
cryptocurrency
Bitcoin rose 1.2% to $61,486.21
Ether rose 1.8% to $2,383.14
bond
The 10-year government bond yield was almost unchanged at 3.85%.
Germany’s 10-year bond yield rose 4 basis points to 2.18%.
The UK 10-year bond yield rose 4 basis points to 4.06%.
merchandise
This article was produced in partnership with Bloomberg Automation.
–With assistance from Divya Patil, Richard Henderson, and Sagarika Jaisinghani.
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