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Hong Kong - European stocks rose for a second day while the dollar weakened against most of its major peers before a U.S. jobs report that may set the tone for Federal Reserve monetary policy.
The Stoxx Europe 600 Index pared losses in the biggest weekly decline in two months. New Zealand’s currency and Britain’s pound, the world’s worst performing major currency this year, led gains against the dollar on Friday.
Crude clawed back some of the last session’s 4.8% plunge, which was triggered by data showing a smaller-than-expected decrease in US supplies.
While anxiety over the fallout from the UK’s vote to leave the European Union flared again in markets this week, the focus of attention on Friday is a US payrolls report that could sway expectations for the timing of the Fed’s next interest-rate hike.
Officials at the central bank flagged concern over job creation at their last meeting, which followed data showing employers in May took on the fewest workers since 2010, casting doubts on prospects for a rate increase this year.
"European markets have done well to open on the green," said Michael Ingram, a strategist at BGC Partners in London. "Feeble volumes belie a real lack of conviction ahead of the US non-farms. Ideally, equity markets would like to see evidence of robust growth and somnolent central banks.”
Stocks
The Stoxx Europe 600 Index rose 0.5% at 12:25, with trading volumes about 15% below the 30-day average. The gauge has dropped 2.6% this week. Futures on the S&P 500 Index expiring in September added 0.2%.
Employers in the US probably added 180 000 workers to nonfarm payrolls last month, according to the median estimate in a Bloomberg survey. That compares with an unexpectedly weak tally of 38 000 reported for May.
The subsequent Brexit vote took an ax to bets on policy tightening in 2016, with the odds on an increase by December having tumbled to just 12% in the futures market from more than 70% at the start of last month.
In Italy, Banco Popolare rallied 9.4% after saying its own stress tests showed “resilience” to adverse shocks. Banca Popolare dell’Emilia Romagna climbed 8.5%, and Banca Monte dei Paschi di Siena added 4.9% after reaching a record low. The lender’s chief executive officer said it’s working “intensely” with authorities to quickly resolve its bad-loan burden.
European automakers climbed as China’s car sales grew faster in the first half of the year. TDC rallied 9.9% after a report that US private-equity firm Apollo Global Management is interested in the Danish telecommunications group.
In the US, Juno Therapeutics sank 27% in early New York trading after saying that three patients died during its clinical trial for a cancer therapy and that the US Food and Drug Administration has placed the study on hold.
Currencies
The Bloomberg Dollar Spot Index slipped 0.1%, trimming this week’s advance to 0.5%.
The kiwi strengthened 0.5% versus the greenback and reached a 14-month high against Australia’s dollar. It jumped 1.4% in the last session after comments from New Zealand central bank Deputy Governor Grant Spencer crushed expectations that interest rates will be cut anytime soon, boosting the attraction of the highest-yielding Group of 10 currency.
The pound climbed 0.4% to $1.2961, heading for a third week of declines against the dollar since the UK referendum on June 23. Sterling is down 2.3% this week and 12% year, the biggest drop among 16 counterparts.
The MSCI Emerging Markets Currency Index was little changed on Friday, leaving it down 0.8% in the week. China’s yuan headed for a fifth weekly decline, depreciating 0.4%, in the longest run of losses this year amid speculation the central bank favours further depreciation to revive the economy.
Commodities
Oil trimmed its biggest weekly decline in five months as investors weighed the largest drop in US output since 2013 against a smaller-than-expected crude stockpile decline. West Texas Intermediate crude rose 0.6% to $45.42 a barrel, paring the weekly drop to 7.3%. Brent rose 0.5% to $46.64.
Gold was poised for its first back-to-back daily drop since the UK voted to leave the EU as investors turned their focus to the US jobs report. Bullion for immediate delivery fell 0.3% to $1 356.54 an ounce and silver slipped 0.2%.
Copper rose 0.4% to $4 706.50 a metric ton, paring its biggest weekly decline in two months amid concern about flagging demand and a surge in inventories around the world. Aluminum gained 0.5% and zinc added 0.35.
Corn advanced 1.8% to $3.48 a bushel, extending its rebound after entering a bear market on July 5. Brazil slashed its estimate for domestic output after drought and frost hurt the crop.
Palm oil is poised to enter a bear market, dragged down by concerns over rising supply and lower prices of alternatives. The benchmark futures contract on Bursa Malaysia Derivatives in Kuala Lumpur has dropped 19 percent from this year’s closing high of 2 779 ringgit reached on March 29.
Bonds
Treasuries headed for a seventh weekly gain as the UK’s vote to leave the EU threatens to slow economic growth and drives investors to the relative safety of bonds. Gains in US jobs and wages won’t be enough to get the Fed to move anytime soon as policy makers assess what’s happening in the global economy, according to Pacific Investment Management’s Mark Kiesel.
German bunds also headed for a seventh weekly gain, the longest run since January 2015. Italian bonds gained on Friday, with the yield on the securities falling three basis points to 1.21%.
