(Bloomberg) — Wall Street equity futures and European stocks struggled to maintain gains on Friday as traders braced for US job numbers due later that will help chart the path forward for Federal Reserve monetary tightening. The dollar strengthened.
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S&P 500 contracts gave up most of an earlier advance, while those on the Nasdaq 100 slipped. Tesla Inc. fell in New York premarket trading after making another round of price cuts on its electric vehicles in China. The Stoxx Europe 600 Index was steady as data showed euro-area inflation returned to single digits for the first time since August. Among individual movers, Shell Plc rose after reporting higher gas-trading earnings.
Treasury 10-year yields steadied after climbing for the first time this week on Thursday following comments from Fed officials. A measure of dollar strength climbed for a second day, while the yen fell to levels not seen in a week, after the Bank of Japan unveiled further unscheduled bond buying to control its yield curve.
Estimates for US nonfarm payroll numbers peg a decline in new jobs added, indicating a cooling in the labor market that would in turn reduce the need for higher interest rates. However, private payrolls figures out on Thursday surpassed estimates and a surprise drop in new claims for unemployment benefits underscored a robust jobs market.
The Fed has remained “extremely hawkish” to avoid unintentionally easing financial conditions, said Craig Erlam, senior market analyst at Oanda. “But another strong jobs report today would further justify such a hawkish approach and perhaps send risk assets into a bit of a tailspin as the prospect of a higher terminal rate increases alongside recession risks,” he wrote in a note.
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Market pricing for US interest rates to peak in June rose to above 5% following comments from Atlanta Fed President Raphael Bostic, who said the central bank still has “much work to do” to tame inflation. St. Louis Fed President James Bullard, who is no longer a voting member of the Federal Open Market Committee,…
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