US jobs data in focus, markets optimistic

investmentnews.com:

European stocks posted modest gains as traders awaited US jobs numbers due later Friday that will test optimism over whether the Federal Reserve’s tightening cycle is nearing an end. 

The Stoxx 600 added about 0.2% to its strongest week since March. Automakers fared best, with BMW AG rising after increased sales of fully electric vehicles boosted margins. A.P. Moller-Maersk A/S, a bellwether for global trade, slumped more than 7% after saying it’s cutting at least 10,000 jobs to shield its profitability.

US equity futures slipped, with Apple Inc. lower in premarket trading after revenue from the greater China region disappointed investors. The mood was brighter in Asia, with MSCI’s regional benchmark gaining more than 1% and headed for its best week in two months. 

Attention is turning to US nonfarm payroll data due later in the day for further conviction on the Fed’s rate path. Bloomberg Economics expects the pace of hiring to slow to less than half of September’s strong gain.

“A decrease in job numbers may signal a loosening of labor conditions, which tend to weaken faster than they tighten,” said economists at Rand Merchant Bank in Johannesburg. “This could also challenge the Fed’s view of keeping interest rates high for longer.”

Data released ahead of payrolls showed US labor productivity advanced by the most in three years, helping to alleviate the inflationary impact of recent wage growth.  

A Bloomberg index of the dollar slipped for the third session, set for its steepest weekly decline since mid-July. Treasury yields ticked higher, with the 10-year at 4.67%.

UBS anticipates the 10-year yield will fall to 3.5% by June next year, as the Fed shifts its attention from rate hikes to rate cuts, according to Solita