(Bloomberg) — Global stocks traded at an all-time high ahead of crucial U.S. jobs data that is expected to show some moderation in hiring. The pound extended its longest winning streak in four years as the Labor Party came to power in the British general election.
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A series of soft US economic data has revived hopes that the Federal Reserve will start cutting interest rates as early as September, pushing MSCI Inc.’s global index down. will rise to a record. European shares rose for a third day on Friday, while US stock futures pointed to a steady open when trading resumes after the holiday on Wall Street.
“Given other evidence of a cooling economic backdrop – weaker ISM Manufacturing PMI and ISM Service Sector PMI reports – the wages report could be increasingly decisive for the Fed as it looks for a reason to recommend a rate cut ,” said Quincy Krosby, chief global strategist for LPL Financial.
British shares and government bonds rose and the pound strengthened for a seventh day after Labor won a majority, giving the country a clear mandate to deliver on its promise for greater economic stability. Keir Starmer’s party passed 400 of the 650 seats in the House of Commons, securing the long-predicted landslide victory.
“A clear majority could bring much-needed stability to the UK political landscape at a time of heightened global uncertainty,” said Samuel Zief, head of global FX strategy at JP Morgan Private Bank. That “could give the pound a boost,” he said.
France’s CAC40 also rose for a third day on indications that Marine Le Pen’s National Rally party is unlikely to win an outright majority in the second round of elections this weekend.
But whichever party comes out on top in France’s parliamentary elections, some investors are betting it marks the start of a more turbulent period for the country’s stock and bond markets. The CAC 40 is the worst performer among major European stock indexes since snap elections were called last month, while at the height of the sell-off, bond market risk rose to the highest level since the sovereign debt crisis.
An index of dollar strength fell for a fourth day, while Treasury yields held steady as traders looked ahead to the jobs report.
According to the median estimate in a Bloomberg survey, payrolls likely increased by 190,000 in June, a decline in hiring from the previous month. The average hourly wage is likely to have increased by 3.9% from a year earlier, the least in three years. The unemployment rate remains stuck at 4%, the highest level in more than two years.
In Asia, Japan’s Topix index briefly hit a new record early Friday, after surpassing the previous record set in 1989 during Thursday’s session. Chinese shares have fallen for seven weeks in a row – the longest losing streak since early 2012 – as investor sentiment continues to weaken ahead of a key policy meeting this month.
The yen strengthened against the dollar for a second day on Friday, recovering 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 rally, saying it now has “hundreds of billions” of securities at its disposal through agreements with lenders.
Oil neared a two-month high as Hurricane Beryl forecast a potentially worse storm season, while shrinking U.S. crude inventories signaled improved demand. Gold headed for back-to-back weekly gains. Bitcoin fell to its lowest level since February.
Main events this week:
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Eurozone retail sales, Friday
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US jobs report, Friday
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John Williams of the Fed will speak on Friday
Some of the major moves in the markets:
Shares
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The Stoxx Europe 600 rose 0.5% as of 8:37 a.m. London time
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Futures on the S&P 500 were little changed
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Nasdaq 100 futures were little changed
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Futures on the Dow Jones Industrial Average rose 0.1%
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The MSCI Asia Pacific Index was little changed
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The MSCI Emerging Markets Index rose 0.2%
Currencies
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The Bloomberg Dollar Spot Index fell 0.1%
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The euro rose 0.1% to $1.0825
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The Japanese yen rose 0.3% to 160.77 per dollar
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The offshore yuan was little changed at 7.2885 per dollar
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The British pound rose 0.1% to $1.2773
Cryptocurrencies
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Bitcoin fell 7.4% to $54,007.85
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Ether fell 9.3% to $2,851.75
Bonds
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The yield on 10-year government bonds was little changed at 4.35%
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The German ten-year yield remained little changed at 2.60%
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The British ten-year yield fell by two basis points to 4.17%
Raw materials
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Brent crude rose 0.1% to $87.53 per barrel
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Spot gold rose 0.3% to $2,363.98 an ounce
This story was produced with the help of Bloomberg Automation.
–With assistance from Richard Henderson and Joe Easton.
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