(Bloomberg) — European and U.S. stock futures rose in line with Asian stocks, ahead of U.S. employment data that will determine the future path for interest rates. The oil price rally eased after tensions in the Middle East led to the biggest one-day jump in almost a year.
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Euro Stoxx 50 futures rose 0.2%, and contracts on the S&P 500 rose 0.1%. Stocks in Japan and South Korea rose, while markets in mainland China were closed for a holiday. A gauge of Chinese stocks in Hong Kong advanced as traders assessed the sustainability of the recent rally and awaited details on fiscal stimulus and holiday spending.
A dollar index fell marginally but is still poised for its biggest weekly gain in almost six months as traders scaled back expectations for aggressive US rate cuts. Government bonds were flat after Thursday’s sell-off, pushing yields higher to levels not seen since September.
West Texas Intermediate and Brent crude fell slightly after rising more than 5% each to a one-month high on Thursday. Earlier gains came after confusing comments from President Joe Biden, who told reporters that the US was discussing whether to support potential Israeli attacks on Iranian oil facilities.
Investors are concerned that if Israel were to attack critical Iranian assets, the Islamic Republic would lash out and escalate the conflict, drawing more countries into it and potentially disrupting global energy shipments. Israel said Thursday it has bombed more than a dozen Hezbollah targets in Beirut.
“The fear in the market is that supply disruptions could come from Iran,” Tai Hui, chief Asian market strategist at JPMorgan Asset Management, said on Bloomberg Television. “Demand for oil should remain healthy, but at the same time the risk to the supply side is high.”
The initial buying frenzy in Chinese stocks following Beijing’s stimulus measures is waning as traders take profits and wait for policy details and holiday spending data to boost confidence. The Chief Investment Officer of Invesco Ltd. for Hong Kong and China, Raymond Ma, who forecast double-digit returns on Chinese stocks this year, said there are signs the rally has gone too far for some stocks. Still, strategists at HSBC Holdings Plc and BlackRock Inc. to Wall Street heavyweights growing bullish on the once beaten market.
The yen strengthened 0.6% against the dollar, paring some of the recent losses from earlier this week, after Japanese Prime Minister Shigeru Ishiba said the country is not ready for another rate hike.
Amid all the geopolitical uncertainty, investors are looking for further signals about the health of the US economy. The monthly payroll report will be released on Friday. The unemployment rate is expected to remain stable at 4.2% in September, while wages are expected to rise by 150,000.
“If unemployment rises, I wouldn’t be surprised if markets shifted back to a 50 basis point expectation, and then the question is how the Fed will respond,” Kallum Pickering, chief economist at Peel Hunt, said on Bloomberg. Television.
Other economic signals pointed to the robustness of the US economy. The Institute for Supply Management’s services index posted its best performance since February 2023, ahead of Wall Street estimates. Claims for U.S. unemployment benefits rose slightly last week to levels consistent with limited layoffs. Continuing claims, a measure of the number of people receiving benefits, were little changed from the previous week.
“The US dollar could remain supported by safe-haven demand amid Middle East risks, and even more so if US payrolls surprise on the upside,” wrote Wei Liang Chang, currency and credit strategist at DBS Bank Ltd. , in a research note. . “The yen may also benefit from this as geopolitical risks limit the appetite for carry trades”
Main events this week:
Some of the major moves in the markets:
Stocks
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Futures on the S&P 500 were little changed at 6:34 a.m. London time
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Nikkei 225 futures (OSE) were little changed
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Japan’s Topix rose 0.3%
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Australia’s S&P/ASX 200 fell 0.7%
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Hong Kong’s Hang Seng rose 2.2%
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Euro Stoxx 50 futures rose 0.2%
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Nasdaq 100 futures rose 0.1%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.1030
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The Japanese yen rose 0.6% to 146.11 per dollar
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The offshore yuan fell 0.2% to 7.0571 per dollar
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The Australian dollar was little changed at $0.6846
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The British pound was little changed at $1.3134
Cryptocurrencies
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Bitcoin rose 0.6% to $61,156.99
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Ether rose 1.5% to $2,376.85
Bonds
Raw materials
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West Texas Intermediate crude fell 0.1% to $73.62 a barrel
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Spot gold rose 0.4% to $2,666.99 an ounce
This story was produced with the help of Bloomberg Automation.
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