European stock markets edged higher on Friday, hovering below the all-time high set in June, before the U.S. will release important employment data later in the day.
As investors bet on the economic benefits of lifting Covid-19 restrictions, the regional Stoxx 600 index rose 0.4% in early trading, while the UK FTSE 100 index rose 0.2%, led by major energy producers such as BP and Royal Dutch Shell Although the Delta variant of the virus has spread.
“We think the European market does benefit from the depreciation of the euro,” said Bastien Drut, chief theme macro strategist at CPR Asset Management. “[Also] There are more cyclical stocks in the European market and benefit more from this reopening. ”
Economists surveyed by Bloomberg predict that the US monthly non-agricultural employment report will show 700,000 new jobs in June, up from 559,000 a month before the data was released late Friday.
After months of lower than expected new jobs, the strong employment data will show investors the strength of the US economic recovery. Although the Fed’s policymakers have indicated that they are willing to keep inflation above the target temporarily, the sharp increase in employment will trigger market speculation that the Fed will be forced to control its support to the economy during the pandemic.
Sophie Chardon, cross-asset strategist at Lombard Odier, said: “I think this is a more important data point than usual, and it may be very critical for the next few weeks.” “Non-agricultural employment data may be one of the triggers, which is why [markets] In a wait-and-see state. “
In June, Fed officials raised their growth and inflation forecasts for the United States, bringing forward the forecast for the first interest rate hike after the pandemic to 2023.
Futures tracking the US index indicate that the S&P 500 index may open 0.5%, while the Nasdaq index tracking technology stocks indicate that it will be flat at the opening of New York.
Although some policymakers in the U.S. Central Bank began to talk more openly about the need to prepare for the gradual end of stimulus measures during the pandemic, in the Eurozone, the European Central Bank has maintained a more moderate stance, reflecting the different steps that countries have taken across the Atlantic Recovery.
“The European Central Bank is always very dovish, and you can see that the Fed is under a lot of pressure to normalize policy and reduce asset purchases,” Drutt said. “In the next few quarters, this path will continue to diverge.”
Globally, bond yields fell slightly. The U.S. 10-year Treasury bond fell 0.014 percentage points to 1.466%, while the 10-year German Treasury yield was flat at minus 0.204%.
There was news on Thursday that the OPEC + major oil-producing countries meeting failed to reach an agreement on supply policies and production levels. It is expected that a decision will be made on Friday, and oil prices will fall. Nevertheless, the global oil benchmark Brent crude oil and the US benchmark West Texas Intermediate crude oil remained above US$75 per barrel.