Europe’s Stoxx 600 gained 0.2%. The advance was fueled by energy stocks amid rising crude prices, while traders braced for a confidence vote that’s expected to topple French Prime Minister Francois Bayrou’s government. The region’s bonds were broadly steady.
US equity futures rose modestly, clawing back most of the losses incurred on fears that the Federal Reserve was falling behind in supporting a rapidly cooling jobs market. Longer-dated Treasuries eased slightly while the dollar nudged 0.1% lower.
The political uncertainty in Japan and France adds to a torrent of US data this week that will help determine the Federal Reserve’s policy path. With a September interest-rate cut fully priced in, upcoming releases on consumer and producer prices will show how much room the Fed has to support a weakening jobs market.
Michael Brown, a senior research strategist at Pepperstone Group Ltd., said investors will have to consider whether a cracking labor market could stall consumer spending, posing a headwind to equities.
“For the time being, though, oodles of AI CapEx from the hyperscalers, plus solid earnings growth, calmer tones prevailing on trade, and a more accommodative policy stance, should all keep the path of least resistance leading higher,” Brown wrote.