European stocks down ahead of US jobs report
European stocks faltered after days of turbulence in global financial markets, as traders waited for monthly US employment data that could strengthen the case for the first US interest rate hike by the era of the pandemic.
The Stoxx 600 regional stock index edged down 0.5% at the start of trading, but was down 0.1% by late morning in London.
This follows a turbulent trading day in the previous session, when the gauge of European stocks fell 1.3 percent and Wall Street stock markets fell. London’s FTSE 100 was broadly stable on Friday morning.
In Asia, Hong Kong’s Hang Seng index rose 1.8% while futures contracts following the Wall Street S&P 500 stock index rose 0.2%.
Economists polled by Reuters expect the report on non-farm wages, released by the Labor Department later Friday, to show employers in the world’s largest economy added 400,000 new workers last month.
A separate ADP payroll processor report released on Wednesday showed private payrolls rose the most in seven months in December.
Investors are likely to take a close look at Friday’s jobs report after minutes from the latest Federal Reserve meeting revealed officials were considering a faster-than-expected interest rate hike schedule. this year, in order to combat high US inflation.
Some Fed officials have suggested that the U.S. central bank may hike rates even before its maximum employment target has been reached, in a revelation that put heavy pressure on tech stocks this week. The sector, home to a host of fast-growing groups, has been bolstered in recent years by low interest rates, which boost the present value of expected future corporate earnings.
âThe markets are ripe for a correction, or more, at this point,â said Phillip Toews, managing director of US asset manager Toews Corporation.
âThe combination of rising interest rates and inflation in asset prices usually doesn’t end well. ”
Last year’s double-digit gains for global equities were fueled by the Fed and other central banks pushing borrowing costs to record highs as they bought massive amounts of bonds from State to protect the financial markets from the shocks of the coronavirus.
âOne of the main market themes in 2022 will likely be the performance of different assets as central banks begin to reduce their support for monetary policy,â said Jim Reid, Deutsche Bank strategist, âespecially that inflation is reaching multi-year highs in a number of countries. ”
US bond markets were stable ahead of the jobs data. The yield on the benchmark 10-year US Treasury bond was flat at 1.727 percent, after rising about 1.53 percent in early January.
The 10-year German Bund yield rose 0.01 percentage point to minus 0.06% and the equivalent Italian bond yield rose 0.02 percentage point to 1.293%.
Foreign exchange markets were flat, with the dollar index, which measures the US currency against six others, down 0.2 percent.
Brent crude, the benchmark for oil, rose about 1% to $ 82.78 a barrel.