Global Stocks Steady Ahead of Key US Payrolls Data: Markets Wrap

European shares opened slightly below their all-time highs as traders awaited the release of US jobs data. The data was expected to provide further insight into the Federal Reserve’s plans for monetary policy easing. The Stoxx 600 index in Europe dipped 0.1% after reaching record levels earlier in the week following the European Central Bank’s decision to begin easing its policies. While technology stocks saw gains, real estate and insurance stocks slipped due to the ECB’s cautious approach towards rate cuts. US stock futures remained stable, and Bloomberg’s dollar gauge showed a slight decline. Despite cautious trading on Friday, global stocks were poised to end a two-week losing streak. The market sentiment was influenced by the increasing expectations of rate cuts, driven by weaker-than-expected US data and recent rate cuts by the Bank of Canada and ECB. Additionally, a Bloomberg gauge of global government bonds experienced its longest rising streak since November.
Homin Lee, a senior macro strategist at Lombard Odier, has observed that recent weaker US economic data, such as jobless claims and labor costs, suggest a gradual rebalancing in the economy. This could potentially lead to a slowdown in service sector inflation. Lee also noted that this shift in the economy has increased bond investors’ confidence in their trades. The upcoming employment report will provide further insight into this trend. It is anticipated that the report will show an addition of 180,000 jobs in May, slightly higher than in April, while the unemployment rate is expected to remain stable. Swap markets are currently pricing in a full rate cut by the Federal Reserve by November, with a strong possibility of one in September.

In other news, China’s exports for May exceeded expectations, indicating the possibility of the world’s second-largest economy sustaining its momentum by relying on foreign markets, despite the new tariff threats it faces.
Oil prices are on track for their third consecutive increase in the commodities market, as the likelihood of OPEC and its allies permitting an oversupply in the market diminished.