Stocks halt gains as traders await US jobs data

 

Europe's Stoxx 600 index opened weaker after two days of gains, putting it on track for a seven-week rising streak, while futures for the S&P 500 and Nasdaq 100 also slipped.

Global stocks were on the back foot on Friday, holding steady after recent sharp gains as traders awaited the monthly US jobs report for clues on the Federal Reserve's next policy moves.

Europe's Stoxx 600 index opened weaker after two days of gains, putting it on track for a seven-week rising streak, while futures for the S&P 500 and Nasdaq 100 also slipped. A gauge of Asian shares fell for the first time in four days, led by Japan, where the yen's five-day rally put pressure on stocks.

Stocks were boosted this week by signs of a softening of China's tough Covid-zero stance and Fed Chair Jerome Powell slowing the pace of rate hikes. Bets on where the US central bank rate will peak have now fallen below 4.9%, according to the swaps markets. The current benchmark sits in a range between 3.75% and 4%.

However, many economists believe Friday's jobs report may fall short of the turning point Fed officials are seeking in their fight to tame inflation. The median projection in a Bloomberg survey calls for an increase of 200,000 in payrolls in November, down slightly from the previous month.

Others point to signs that faster rate hikes will drive more economies into recession.

"The consensus is a recession is coming, but equities may not bottom out before they start, inflation won't fall quickly, so central banks may not blink, China reopening," said Emmanuel Cau, strategist at Barclays Plc. There will be a messy process and Europe will remain difficult." A Comment.

With US manufacturing contracting for the first time since May 2020, recession concerns became more apparent after data on Thursday showed November factory activity slumped in many countries.

Bets on declining rate hikes have pushed the dollar lower, leading to gains in lower-yielding G-10 currencies such as the yen and the euro. Dollar selling eased on Friday with the greenback flat against a basket of currencies. The 10-year Treasury yield also edged up marginally after hitting a 2-1/2-month low.