January 28, 2023

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Stocks and US Futures Subdued Before Key Jobs Data: Markets Wrap

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(Bloomberg) — European stocks and Wall Street equity futures struggled to maintain gains on Friday as traders braced for US job numbers due later that will help chart the path forward for Federal Reserve monetary tightening. The dollar strengthened.

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The Stoxx Europe 600 Index was steady as data showed euro-area inflation returned to single digits for the first time since August. Among individual movers, Shell Plc rose after reporting higher gas-trading earnings. S&P 500 contracts erased an advance to be little changed, while those on the Nasdaq 100 slipped. Tesla Inc. fell in New York premarket trading after making another round of price cuts on its electric vehicles in China.

Treasury 10-year yields steadied after climbing for the first time this week on Thursday following comments from Fed officials. A measure of dollar strength climbed for a second day, while the yen fell to levels not seen in a week, after the Bank of Japan unveiled further unscheduled bond buying to control its yield curve.

Estimates for US nonfarm payroll numbers peg a decline in new jobs added, indicating a cooling in the labor market that would in turn reduce the need for higher interest rates. However, private payrolls figures out on Thursday surpassed estimates and a surprise drop in new claims for unemployment benefits underscored a robust jobs market.

“What the Fed really wants to see is some slack build up in the labor markets, in hopes it can do this gently without creating much of a downturn,” Raghuram Rajan, a former governor of India’s central bank, said on Bloomberg Television. “But it may well be that by the time it seems that it will have raised rates enough, that the momentum takes us down to a mild recession at the very least.”

Market pricing for US interest rates to peak in June increased to above 5% following comments from Atlanta Fed President Raphael Bostic, who said the central bank still has “much work to do” to tame inflation. St. Louis Fed President James Bullard, who is no longer a voting member of the Federal Open Market Committee, said rates were approaching a sufficiently restrictive zone and that inflation expectations had retreated, offering investors some optimism.

Meanwhile, Citigroup Inc. strategists said European stocks are better prepared than their pricey US peers for a slide in earnings that’s set to take place this year. A team led by Robert Buckland raised European equities to overweight on Friday, saying valuations already discount a 15% drop in earnings. At the same time, they cut US shares to underweight on the grounds that earnings expectations are still too optimistic.

In Asia, a gauge of the region’s stocks rose in the first week of trading in 2023 amid China’s reopening moves and its measures to boost the economy. In the latest evidence of growing pressure on technology companies Samsung Electronics Co. reported a demand slump resulting in a 69% plunge in operating profit.

Oil climbed after a string of declines that wiped nearly 10% from the price of crude. The price of gold increased after retreating Thursday from a six-month high reached earlier in the week.

Key events this week:

  • Eurozone retail sales, CPI, consumer confidence, Friday

  • Germany factory orders, Friday

  • US nonfarm payrolls, factory orders, durable goods, Friday

Some of the main moves in markets:


  • The Stoxx Europe 600 was little changed as of 10:06 a.m. London time

  • S&P 500 futures were little changed

  • Nasdaq 100 futures fell 0.2%

  • Futures on the Dow Jones Industrial Average were little changed

  • The MSCI Asia Pacific Index was little changed

  • The MSCI Emerging Markets Index rose 0.1%


  • The Bloomberg Dollar Spot Index rose 0.2%

  • The euro fell 0.1% to $1.0511

  • The Japanese yen fell 0.7% to 134.30 per dollar

  • The offshore yuan rose 0.3% to 6.8688 per dollar

  • The British pound fell 0.4% to $1.1857


  • Bitcoin fell 0.4% to $16,782.28

  • Ether fell 0.3% to $1,247.75


  • The yield on 10-year Treasuries advanced one basis point to 3.73%

  • Germany’s 10-year yield was little changed at 2.32%

  • Britain’s 10-year yield advanced one basis point to 3.56%


  • Brent crude rose 0.8% to $79.29 a barrel

  • Spot gold rose 0.1% to $1,835.35 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Tony Jordan and Richard Henderson.

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