Asian stocks set to climb ahead of jobs report: Market review

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(Bloomberg) – Asian stocks looked set to rise on Friday after US stocks fell two days ahead of a key jobs report as traders weigh the outlook for inflation and growth.

Futures contracts for Japan and Australia were pointing up. Markets will be closed in Hong Kong and mainland China, where officials have pledged to pursue a series of government policies to stimulate the economy. Earlier, the S&P 500 rose 1.8%, driven by gains in consumer discretionary stocks, while the tech-heavy Nasdaq 100 gained 2.8%. US futures rose slightly in early trading in Asia.

The dollar fell as risk-sensitive currencies, including those of Australia and New Zealand, rallied. Benchmark Treasury yields were little changed just above 2.9%.

Investors remain nervous as some fear the pace of US monetary tightening could push the world’s largest economy into recession. Friday’s jobs report in May is expected to show the smallest gain in jobs since April 2021, alongside a drop in growth in average hourly earnings, according to Bloomberg Economics.

Still, Federal Reserve Vice Chairman Lael Brainard said it was hard to see a case for a September pause in rate hikes and that 50 basis point increases in June and July seemed reasonable. .

“We think a slight tilt towards the defensive sectors and away from the growth-oriented areas of this market still makes sense,” said Scott Brown, technical market strategist at LPL Financial. “Apart from this recent rally, very little in this market has changed from a technical standpoint and that prevents us from calling the green light.”

Meanwhile, OPEC+ has agreed to increase the scale of its oil supply hikes by around 50% in July and August, bowing to pressure from major consumers, including the United States, to fill the gap. vacuum created by sanctions on Russian supplies. Still, oil rose on Thursday and remains an important driver of inflationary pressures.

How will the markets be affected by the Fed’s quantitative tightening? QT officially begins on Wednesday and is the topic of this week’s MLIV Pulse survey. Click here to participate anonymously.

Here are some key events to watch this week:

  • US jobs report for May Friday
  • The Food and Agriculture Organization of the United Nations releases its monthly food price index on Friday at a time when global supplies are of maximum concern

Some of the major movements in the markets:

Shares

  • S&P 500 futures rose 0.1% at 7:02 a.m. in Tokyo. The S&P 500 rose 1.8%
  • Nasdaq 100 futures rose 0.1%. The Nasdaq 100 climbs 2.8%
  • Nikkei 225 futures gained 1%
  • Australian S&P/ASX 200 index futures advanced 1.1%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.7%
  • The Japanese yen was little changed at 129.85 per dollar
  • The offshore yuan was at 6.6580 to the dollar
  • The euro was at $1.0747

Obligations

  • The 10-year Treasury yield was little changed at 2.91%

Goods

  • West Texas Intermediate crude rose 0.6% to $117.52 a barrel
  • Gold futures were at $1,868.64 an ounce

©2022 Bloomberg LP

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