Markets Settle into Holding Pattern Ahead of US Jobs Data

European Stocks and American Equity-Index Futures Edge Higher

Treasury Yields Flat and Dollar Gauge Steady

(Bloomberg) — Markets settled into a holding pattern ahead of Friday’s key US jobs data, with European stocks and American equity-index futures edging higher, Treasury yields flat and a gauge of the dollar steady.

Energy Majors Outperform in Stoxx Europe 600 Index

• Crude oil headed for the biggest weekly advance since April
• Miners jumped as China’s latest stimulus measures boosted prices of some industrial metals
• Car makers declined, with Renault SA and Volkswagen AG falling more than 3% each after being downgraded to sell by UBS Group AG on increasing competition from Asia
• Aurubis AG slumped as much as 18% after Europe’s top copper producer said it faces large losses due to a massive metal theft

Futures on S&P 500 and Nasdaq 100 Rise

• Futures on the S&P 500 rose about 0.3%
• Futures on the Nasdaq 100 rose about 0.2%
• Broadcom Inc. dropped as much as 4.6% in premarket trading after a muted revenue forecast

US Jobs Data and European Central Bank Meeting in Focus

Friday’s payrolls report may provide further evidence of slight cooling in the still-tight US labor market. The question is whether that will be enough to stall the Federal Reserve’s tightening cycle or even lead to early rate cuts. Meanwhile, a rapidly weakening economy is likely to tilt the European Central Bank in favor of a pause this month, with no further hikes beyond the current rate of 3.75%, according to Morgan Stanley economists.

“A tighter-than-expected job market will add fuel to the inflation fire, while a slowdown would be welcome and suggest that monetary tightening is starting to have some effect,” said Sophie Lund-Yates, an analyst at Hargreaves Lansdown Plc. “There’s growing hope that interest rates are going to remain in their current position, rather than rise, at the next meeting, and the jobs data will be an important component of that.”

China’s Efforts to Rescue Economy Boost Asian Markets

China’s fresh efforts to rescue an ailing economy sent the MSCI Asia Pacific Index toward a second straight week of gains, the longest such streak since mid-June. The government will allow the nation’s largest cities to cut down payments for home buyers and encouraged lenders to lower rates on existing mortgages as well as on deposits.

Mainland China shares traded higher and metals looked set to extend this week’s advances. Hong Kong’s market is shut on what may be the strongest storm to hit the city in at least five years.

The yuan also strengthened after China’s central bank reduced the foreign exchange reserve requirement ratio for financial institutions in a bid to support the currency. The currency has since pared its gains. Sentiment was further buoyed by an unexpected rise in manufacturing data that advanced to 51 in August, the highest reading since February, according to a Caixin survey.

Japan’s Topix Index Posts Eighth Consecutive Month of Increase

Japan’s Topix index posted its eighth consecutive month of increase in August — the longest winning streak since 2013 — and the gauge was now set for the best weekly advance since October. Data earlier showed companies’ profits rose 11.6% on an annual basis in the second quarter.

Commodities Update

In commodities, oil is set for a weekly gain after Russia signaled that it would extend export curbs and US inventories dropped further. Gold headed for the second weekly advance.

Key Events This Week

• South African central bank governor Lesetja Kganyago, Atlanta Fed President Raphael Bostic, BOE’s Huw Pill, IMF’s Gita Gopinath on panel at the South African Reserve Bank conference, Friday
• Boston Fed President Susan Collins speaks at virtual event, Friday
• US unemployment, nonfarm payrolls, light vehicle sales, ISM manufacturing, construction spending, Friday

Market Movements

Stocks

• The Stoxx Europe 600 rose 0.4% as of 10:37 a.m. London time
• S&P 500 futures rose 0.3%
• Nasdaq 100 futures rose 0.1%
• Futures on the Dow Jones Industrial Average rose 0.3%
• The MSCI Asia Pacific Index rose 0.5%
• The MSCI Emerging Markets Index rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.1% to $1.0854
• The Japanese yen was little changed at 145.43 per dollar
• The offshore yuan rose 0.1% to 7.2656 per dollar
• The British pound was little changed at $1.2683

Cryptocurrencies

• Bitcoin was little changed at $26,002.13
• Ether fell 0.3% to $1,644.06

Bonds

• The yield on 10-year Treasuries was little changed at 4.10%
• Germany’s 10-year yield advanced two basis points to 2.48%
• Britain’s 10-year yield advanced two basis points to 4.38%

Commodities

• Brent crude rose 0.6% to $87.39 a barrel
• Spot gold rose 0.2% to $1,943.91 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Lars Mucklejohn, Tassia Sipahutar and Sagarika Jaisinghani.

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