(Bloomberg) — U.S. equity futures inched higher as a cautious tone settled over markets the day before key U.S. jobs data that will shape bets on the path of Federal Reserve policy tightening.
S&P 500 futures rose 0.2% after the main gauge closed flat on Wednesday. Ten-year U.S. Treasury yields held steady near 1.3% after a report showed initial jobless claims at a new pandemic low, with a drop that exceeded estimates. The dollar was unchanged.
All eyes now turn to U.S. payrolls data due Friday for clues on the economy and the implications for a reduction in the Fed’s $120 billion of monthly bond purchases.
Investors are trying to assess when the delta-Covid variant outbreak might peak and how that will play into timing of Fed bond taper plans. Global stocks are near record levels and gauges of implied financial market volatility are declining, yet a move into defensive havens such as mega-tech stocks are a sign traders are bracing for more negative data surprises.
“Some investor caution is natural given elevated valuation multiples and a challenging macro environment,” according to Lewis Grant, senior portfolio manager at Federated Hermes. “The delta variant continues to soften consumer confidence across the world. Concerns over parts shortages and supply chain frictions have not eased.”
A market prepared for bad news may not actually welcome a payrolls report that shows a strong recovery in employment, according to Craig Erlam, senior market analyst at OANDA Europe. That’s because ongoing labor market weakness is likely to deter Fed tapering and rate hikes.
“A reading at, or above, expectations of 750,000 may be a nasty shock, despite being a healthy sign for the economy,” Erlam wrote in a note to clients.
Elsewhere, Chinese tech shares listed in Hong Kong came off their highs after criticism of ride-hailing firms highlighted risks from the nation’s ongoing crackdown on private industries. China’s overall market was steady, with traders assessing a central bank step to cushion the economy by helping smaller firms.
In Europe, energy firms and healthcare stocks were the biggest gainers in the Stoxx Europe 600.
Oil edged higher after OPEC+ stuck with a plan to boost crude production, with wagers that the market can absorb the additional supply.
Bitcoin traded above the widely-watched $50,000 level as the wider cryptocurrency market continued its rally.
Here are some key events to watch this week:
U.S. jobs report Friday
For more market analysis, read our MLIV blog.
Futures on the S&P 500 Index gained 0.2% as of 8:42 a.m. New York time.The Stoxx Europe 600 Index rose 0.3%.The MSCI Asia Pacific Index increased 0.1%.The MSCI Emerging Market Index climbed 0.1%.
The Bloomberg Dollar Spot Index was little changed.The euro was little changed at $1.184.The British pound jumped 0.1% to $1.3786.The onshore yuan was little changed at 6.458 per dollar.The Japanese yen was little changed at 110.03 per dollar.
The yield on 10-year Treasuries declined one basis point to 1.29%.Germany’s 10-year yield dipped two basis points to -0.39%.Japan’s 10-year yield increased one basis point to 0.036%.Britain’s 10-year yield sank two basis points to 0.671%.
West Texas Intermediate crude gained 0.8% to $69.12 a barrel.Brent crude increased 0.6% to $72.03 a barrel.Gold weakened 0.1% to $1,811.69 an ounce.
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