(Bloomberg) -- Stocks in Asia and US futures climbed ahead of crucial jobs data that will help identify the path forward for Federal Reserve monetary tightening.
Equities in Hong Kong and China opened higher to extend a rally this week on reopening optimism. Stocks in Australia, South Korea and Japan rose. Contracts for European futures and those for the S&P 500 made small gains after the US index fell 1.2% on Thursday.
The policy-sensitive two-year Treasury yield inched higher after climbing by the most in a month on Thursday. The dollar steadied and the yen fell after the Bank of Japan unveiled further unscheduled bond buying.
The broadly positive sentiment precedes US nonfarm payroll data to be released Friday. Estimates 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 data released Thursday surpassed estimates and a surprise fall in new claims for unemployment benefits underscored a robust jobs market.
Market pricing for US interest rates to peak in June increased to above 5%. The increase followed comments from Atlanta Fed President Raphael Bostic who said Thursday the central bank still has “much work to do” to tame inflation. Minneapolis Fed President Neel Kashkari said Wednesday he expects rates to rise as high as 5.4%. St. Louis Fed President James Bullard said Thursday rates were approaching a sufficiently restrictive zone and that inflation expectations had retreated, offering investors some optimism.
“What the Fed really wants to see is some slack build up in the labor markets, in hopes it can do this gently without creating much of a downturn,” Raghuram Rajan, a former governor of India’s central bank, said on Bloomberg Television. “But it may well be that by the time it seems that it will have raised rates enough, that the momentum takes us down to a mild recession at the very least.”
The rise in European stock futures comes ahead of eurozone consumer price index data due later today. Consensus forecasts suggest inflation fell to 9.5% in December from a year earlier, down from 10.1% recorded in November.
Oil rose further after a string of declines that wiped nearly 10% from the price of crude. Gold was steady after retreating slightly from a six month high reached earlier in the week.
Key events this week:
- Eurozone retail sales, CPI, consumer confidence, Friday
- Germany factory orders, Friday
- US nonfarm payrolls, factory orders, durable goods, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.4% as of 10:37 a.m. Tokyo time. The S&P 500 fell 1.2%
- Nasdaq 100 futures rose 0.4%. The Nasdaq 100 fell 1.6%
- Japan’s Topix rose 0.3%
- Australia’s S&P/ASX 200 rose 0.5%
- The Shanghai Composite rose 0.1%
- Hong Kong’s Hang Seng Index rose 0.4%
- Euro Stoxx 50 futures rose 0.3%
Bonds
- The yield on 10-year Treasuries was little changed at 3.73%
- Japan’s 10-year yield advanced seven basis points to 0.50%
- Australia’s 10-year yield declined one basis point to 3.82%
Commodities
- West Texas Intermediate crude rose 1% to $74.41 a barrel
- Spot gold was little changed