Asian stocks and US futures rise as job data takes center stage: markets review

(Bloomberg) — Asian stocks and US futures rose ahead of important US jobs data that will help set the direction for further Federal Reserve tightening.

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Stocks in Japan, Australia and South Korea rose. Shares in China and Hong Kong fluctuated after initial gains on news that Chinese authorities would lift restrictions on homebuilders’ borrowing. Contracts for European futures and the S&P 500 rose after the US index fell 1.2% on Thursday.

Yields on 10-year Treasury bonds fell slightly after the first increase in a week on Thursday after comments from Fed officials. The dollar stabilized and the yen fell to levels not seen in a week after the Bank of Japan announced further unscheduled bond purchases to control its yield curve.

Generally positive sentiment precedes Friday’s release of US nonfarm payrolls data. Estimates point to a decline in the number of new jobs, indicating a cooling in the labor market, which in turn will reduce the need for higher interest rates. However, Thursday’s private employment data beat estimates, and an unexpected drop in new jobless claims underscored the resilience of the labor market.

“What the Fed really wants to see is some loosening in labor markets in the hope that it can do it softly without causing a significant downturn,” Raghuram Rajan, a former Indian central bank governor, told Bloomberg Television. “But it could very well be that by the time he looks like he’s raising rates enough, the momentum will take us into at least a moderate recession.”

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Market prices for US interest rates, which peaked in June, rose to more than 5% after comments by Atlanta Fed President Rafael Bostic, who said the central bank still had “a lot of work” to contain inflation. Louis Fed President James Bullard, who is no longer a voting member of the Federal Open Market Committee, said that rates are approaching a fairly restrictive zone, and inflation expectations have decreased, which gives investors some optimism.

Signs of pressure on tech companies are mounting: Samsung Electronics Co. the latter reported a drop in demand, resulting in a 69% drop in operating profit. Shares of the South Korean giant rose amid speculation that a hit to earnings would prompt the company to cut capital expenditures.

The rise in futures for European stocks outpaces data on the eurozone consumer price index, which will be published later today. Consensus forecasts suggest inflation eased to 9.5% in December year-over-year, from 10.1% in November.

Oil rose even more after a series of falls that saw oil prices fall by almost 10%. The price of gold rose after pulling back on Thursday from a six-month high hit earlier in the week.

Key events of this week:

  • Eurozone retail sales, consumer price index, consumer confidence, Friday

  • Germany factory orders, Friday

  • US Nonfarm Payrolls, Factory Orders, Durable Goods, Friday

Some of the major movements in the markets are:

Stock

  • S&P 500 futures were up 0.4% as of 2:26 pm Tokyo time. The S&P 500 fell 1.2%.

  • Nasdaq 100 futures rose 0.4%. The Nasdaq 100 fell 1.6%.

  • Australian S&P/ASX 200 up 0.7%

  • Japanese Topix up 0.5%

  • The Hong Kong Hang Seng fell 0.4%.

  • Shanghai Composite has changed little

  • Euro Stoxx 50 futures up 0.7%

Currencies

  • Bloomberg Spot Dollar Index Little Changed

  • The euro changed slightly at $1.0517.

  • The Japanese yen fell 0.4% to 133.90 per dollar.

  • The offshore yuan rose 0.4% to 6.8623 per dollar.

Cryptocurrencies

  • Bitcoin fell 0.2% to $16,810.36.

  • Ether fell 0.2% to $1249.55.

Bonds

  • The yield on 10-year Treasuries remained virtually unchanged at 3.72%.

  • Japan’s 10-year bond yield rose seven basis points to 0.50%.

  • The yield on 10-year Australian bonds fell one basis point to 3.82%.

Goods

  • West Texas Intermediate crude rose 0.8% to $74.26 a barrel.

  • Spot gold rose 0.2% to $1,837.16 an ounce.

This story was produced with the assistance of Bloomberg Automation.

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