Stocks halt gains as traders await US jobs data

Europe’s Stoxx 600 index opened weaker after two days of gains, putting it on track for a seven-week rising streak, while futures for the S&P 500 and Nasdaq 100 also slipped. A gauge of Asian shares fell for the first time in four days, led by Japan, where the yen’s five-day rally put pressure on stocks.

Stocks were boosted this week by signs of a softening of China’s tough Covid-zero stance and Fed Chair Jerome Powell slowing the pace of rate hikes. Bets on where the US central bank rate will peak have now fallen below 4.9%, according to the swaps markets. The current benchmark sits in a range between 3.75% and 4%.

However, many economists believe Friday’s jobs report may fall short of the turning point Fed officials are seeking in their fight to tame inflation. The median projection in a Bloomberg survey calls for an increase of 200,000 in payrolls in November, down slightly from the previous month.

Others point to signs that faster rate hikes will drive more economies into recession.

“The consensus is a recession is coming, but equities may not bottom out before they start, inflation won’t fall quickly, so central banks may not blink, China reopening,” said Emmanuel Cau, strategist at Barclays Plc. There will be a messy process and Europe will remain difficult.” A Comment.

With US manufacturing contracting for the first time since May 2020, recession concerns became more apparent after data on Thursday showed November factory activity slumped in many countries.

Bets on declining rate hikes have pushed the dollar lower, leading to gains in lower-yielding G-10 currencies such as the yen and the euro. Dollar selling eased on Friday with the greenback flat against a basket of currencies. The 10-year Treasury yield also edged up marginally after hitting a 2-1/2-month low.

Stock markets in Hong Kong and mainland China declined after three days of gains. Investors will be eyeing the annual conference of the Communist Party’s top decision-making body in early December, which is expected to signal a pragmatic approach towards Covid control while stressing the need to boost economic growth.

Elsewhere, South Africa’s rand strengthened slightly after falling 2.6% on Thursday. The rand held off gains against emerging market currencies this week due to political turmoil around President Cyril Ramaphosa.

Oil is headed for its biggest weekly gain in nearly two months, benefiting from Chinese sanctions, a move by the Biden administration to halt crude sales from US strategic reserves and cut supplies by the most since 2020. The decision of the OPEC producers group has been called for.

Major events of the week:

• US Unemployment, Non-Farm Payrolls, Friday

Some key moves in the markets:

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• The Stoxx Europe 600 fell 0.5% as of 8:29 a.m. London time
• Futures on the S&P 500 fell 0.2%
• Futures on the Nasdaq 100 fell 0.3%.
• Futures on the Dow Jones Industrial Average fell 0.1%
• MSCI Asia Pacific index fell 0.5%
• MSCI Emerging Markets Index fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.1% to $1.0531
• The Japanese yen rose 0.7% to 134.43 per dollar
• The offshore yuan rose 0.1% to 7.0290 per dollar
• The British pound rose 0.3% to $1.2279

cryptocurrency

• Bitcoin rose 0.1% to $16,952.64
• Ether was little changed at $1,275.69

bond

• The yield on 10-year Treasuries rose two basis points to 3.52%
• Germany’s 10-year yield was little changed at 1.81%
• UK 10-year yield fell two basis points to 3.08%

Goods

• Brent crude fell 0.3% to $86.63 a barrel
• Spot gold fell 0.1% to $1,801.10 an ounce