Global Stocks at a Record High Before US Jobs Data: Markets Wrap

(Bloomberg) — Global stocks traded at all-time highs before crucial US jobs data that’s expected to show some moderation in hiring. The pound added to its longest winning streak in four years as the Labour Party swept to power in the UK general election.

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A series of soft US economic readings has revived hopes that the Federal Reserve will start cutting interest rates as soon as September, pushing MSCI Inc.’s world index to a record. European stocks rose for a third day Friday, while US equity futures pointed to a steady opening when trading resumes on Wall Street after the holiday.

“Given other evidence of a cooling economic backdrop — weaker ISM Manufacturing PMI and ISM Service Sector PMI reports — the payroll report could be increasingly decisive for the Fed as it seeks a rationale to signal an easing of rates,” said Quincy Krosby, chief global strategist for LPL Financial.

UK stocks and government bonds rose and the pound strengthened for a seventh day after Labour won a majority, giving it a clear mandate to deliver on its pledge for greater economic stability. Keir Starmer’s party passed 400 of the 650 seats in the House of Commons, securing its long-predicted landslide victory.

“A clear majority could bring some much-needed stability to the UK political landscape at a time of heightened global uncertainty,” said Samuel Zief, head of global FX strategy at J.P. Morgan Private Bank. That “could provide a bit of a kicker for the pound,” he said.

France’s CAC40 also rose for a third day, following indications that Marine Le Pen’s National Rally party will likely fall short of an absolute majority in second-round elections this weekend.

Still, no matter which party comes out on top in the French parliamentary vote, some investors are betting it marks the beginning of a more turbulent period for the country’s stock and bond markets. The CAC 40 has been the worst performer among major European stock indexes since the snap election was called last month, while at the height of the selloff a metric of bond-market risk soared to its highest since the sovereign debt crisis.

An index of dollar strength slipped for a fourth day, while Treasury yields were steady as traders looked ahead to the jobs report.

Payrolls probably rose by 190,000 in June, a step-down in hiring from the previous month, according to the median estimate in a Bloomberg survey. Average hourly earnings likely increased 3.9% from a year earlier, the least in three years. The unemployment rate is seen holding at 4%, the highest level in more than two years.

In Asia, Japan’s Topix index briefly touched another record early Friday, having surpassed the previous high set in 1989 in Thursday’s session. Chinese stocks have fallen for seven straight weeks — the longest losing streak since early 2012 — as investor sentiment continues to weaken ahead of a key policy meeting this month.

The yen strengthened for a second day on Friday against the greenback to rebound further from the lowest level since 1986 reached on Wednesday. China’s central bank took the next step toward selling government bonds to cool a record-breaking rally, saying it now has “hundreds of billions” of yuan of the securities at its disposal through agreements with lenders.

Oil traded near a two-month high as Hurricane Beryl portended a potentially worse storm season, while shrinking US crude stockpiles hinted at improved demand. Gold headed for a back-to-back weekly gain. Bitcoin fell to the lowest levels since February.

Key events this week:

• Eurozone retail sales, Friday

• US jobs report, Friday

• Fed’s John Williams speaks, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.5% as of 8:37 a.m. London time

• S&P 500 futures were little changed

• Nasdaq 100 futures were little changed

• Futures on the Dow Jones Industrial Average rose 0.1%

• The MSCI Asia Pacific Index was little changed

• The MSCI Emerging Markets Index rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro rose 0.1% to $1.0825

• The Japanese yen rose 0.3% to 160.77 per dollar

• The offshore yuan was little changed at 7.2885 per dollar

• The British pound rose 0.1% to $1.2773

Cryptocurrencies

• Bitcoin fell 7.4% to $54,007.85

• Ether fell 9.3% to $2,851.75

Bonds

• The yield on 10-year Treasuries was little changed at 4.35%

• Germany’s 10-year yield was little changed at 2.60%

• Britain’s 10-year yield declined two basis points to 4.17%

Commodities

• Brent crude rose 0.1% to $87.53 a barrel

• Spot gold rose 0.3% to $2,363.98 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Richard Henderson and Joe Easton.

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