Stocks, dollar steady ahead of US jobs report
Global stocks headed for their strongest weekly gain since May on Friday, ahead of major US jobs data, as investor optimism over robust earnings growth and enthusiasm over AI helped offset concern about the conflict in the Middle East.
MSCI’s All-World index has risen 2.4% this week, the most in three months, and on Friday was steady, while shares in drugmakers and technology companies lifted Europe’s STOXX 600 by 0.6 per cent on the day and 2% for the week.
After bouts of volatility sparked by concerns over the durability of the AI-driven rally, investors are now squarely focused on the US payrolls report due later in the day, which could prove crucial for the interest rate outlook.
Forecasts are centred on a rise of 80,000 jobs for July after a 57,000 gain in June, with the unemployment rate forecast to hold steady at 4.2 per cent.
Money markets show traders are split over whether the Federal Reserve will raise rates next month, meaning Friday’s payrolls number could be instrumental in tipping the balance in one direction or another.
“With yields and inflation still the key risks for stocks, we expect Friday’s NFP to trade as a ‘good news is bad news’ print,” said Michael Feroli, chief US economist at JPMorgan, adding that a strong jobs number would reinforce higher-for-longer pricing and put upward pressure on rates.
Conversely, equities may respond positively to a soft non-farm payrolls report as yields ease and policy expectations shift towards a dovish path, added Feroli.
