Stocks slip as markets brace for more US jobs data: Markets wrap

July 08, 2023

Stocks declined as investors waited on another round of US jobs numbers to gauge if they will back new bets for more Federal Reserve rate hikes.

Shares in Europe slipped for a third day, dragged lower by utilities and media stocks as the regional benchmark headed for its worst week since the middle of March. US equity futures signaled more of the losses seen Thursday in the S&P 500 and Nasdaq 100 benchmarks after stronger-than-expected private hiring data. Asian stocks slid for a third day.

In corporate news, Just Eat Takeaway.com NV shares fell after analysts at Exane and JPMorgan Chase & Co. turned bearish on the food-delivery company. Persimmon Plc was among UK homeowners trading lower after Halifax said house prices are falling at their fastest annual pace since 2011. Thyssenkrupp AG’s Nucera hydrogen unit rose as it started trading in Frankfurt at a difficult time for new listings in Europe.

Traders added to wagers of more rate hikes after ADP Research Institute data on Thursday showed US companies added the most jobs in more than a year in June. Friday’s US nonfarm payrolls and unemployment reports will be key to any more revisions in rate-hike expectations after the ADP numbers prompted a spike in Treasury yields.

“If we get a consensus-type report, it is possible that the market takes yields off their extremes into the weekend,” ING Groep NV rates strategists led by Antoine Bouvet wrote in a note. “But we’d still maintain that there has been enough in the past few days of data for any pullback to be reversed next week, and for the push higher in yields to continue.”

Treasuries steadied in Friday trading, with the policy sensitive two-year yield near 5%, while the 10-year hovered close to the highest since March.

Swap contracts linked to the Federal Reserve’s future policy decisions almost fully price in a quarter-point interest-rate hike by July 26 and show a growing likelihood of an additional move by year-end. This expectation for higher rates is reinforcing bets on tighter monetary policy globally as central banks struggle to rein in inflation.

Dallas Fed President Lorie Logan voiced her concerns on Thursday that inflation was still running too hot and more tightening was needed. Policymakers elsewhere share that view, with European Central Bank President Christine Lagarde saying there is still “work to do” to bring inflation under control.

Back in Asia, shares of Alibaba Group Holding Ltd. jumped as much as 6.4% in Hong Kong after Reuters said Chinese authorities will wrap up a probe on Ant Group Co. as soon as Friday with a fine of more than $1.1 billion, capping years of scrutiny over the digital finance leader founded by Jack Ma.

US Treasury Secretary Janet Yellen held informal talks with China’s former Vice Premier Liu He and the People’s Bank of China governor Yi Gang as she began two days of talks designed to stabilize fraught ties between the two superpowers.

Investors also remained on the lookout for any stimulus decision by the Chinese government after Premier Li Qiang pledged to “spare no time” in implementing a batch of targeted policies to strengthen the country’s economic recovery.

Some of the main moves in markets today:

Stocks

  • The Stoxx Europe 600 fell 0.4% as of 8:46 a.m. London time

  • S&P 500 futures fell 0.2%

  • Nasdaq 100 futures fell 0.3%

  • Futures on the Dow Jones Industrial Average fell 0.2%

  • The MSCI Asia Pacific Index fell 0.8%

  • The MSCI Emerging Markets Index fell 0.7%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0883

  • The Japanese yen rose 0.6% to 143.24 per dollar

  • The offshore yuan was little changed at 7.2539 per dollar

  • The British pound was unchanged at $1.2740

Cryptocurrencies

  • Bitcoin fell 0.7% to $30,099.5

  • Ether fell 1.3% to $1,858.57

Bonds

  • The yield on 10-year Treasuries was little changed at 4.03%

  • Germany’s 10-year yield was little changed at 2.63%

  • Britain’s 10-year yield was little changed at 4.65%

Commodities

  • Brent crude rose 0.7% to $77.03 a barrel

  • Spot gold rose 0.2% to $1 914.68 an ounce

© 2023 Bloomberg