PARIS :European equities rose in early trading on Friday while long-dated bond yields eased, as expectations for U.S. rate cuts helped markets overcome concerns about fiscal deficits in various countries.
The S&P 500 hit a new all-time high on Thursday after weekly jobs data showed more jobless claims than expected. Asian stocks tracked Wall Street higher overnight.
At 0752 GMT, the MSCI World Equity Index was up 0.3 per cent on the day and Europe’s STOXX 600 was up 0.4 per cent, set to end the week slightly higher overall after recovering from a dip earlier in the week.
The FTSE 100 was up 0.3 per cent and France’s CAC 40 was up 0.2 per cent.
Markets are all but certain of a quarter-point cut at the conclusion of the Fed’s two-day rate-setting meeting on September 17, according to LSEG data.
Traders will be looking to the monthly U.S. jobs report due later in the session to confirm their expectations. A weaker labour market boosts stocks because it raises expectations that the Federal Reserve will cut rates.
“We have already seen yesterday the sign that perhaps there will be a weakening in jobs, paving the way for a done deal in September,” said Francesco Sandrini, head of multi-asset strategies at Amundi.
Today’s numbers “can confirm to some extent an easing stance of the Federal Reserve,” Sandrini added.
Fed Chair Jerome Powell had already reinforced rate cut speculation with an unexpectedly dovish speech at last month’s Fed symposium in Jackson Hole.
“Unless it’s an absolutely stellar payrolls print, it’s hard to see too much that’s going to change the market away from locking in a September cut,” said Ken Crompton, head of rates strategy at National Australia Bank.
“Beyond that, the terminal rate and how you get there, that’s arguably still up for grabs.”
Market sentiment has recovered in recent sessions after global stocks fell earlier this week and long-date bond yields in Europe hit their highest in years, as investors became concerned about the state of various countries’ finances, particularly Britain and France.
Yields eased on Friday, with France’s 30-year yield at 4.3944 per cent, down from a peak of 4.523 per cent on Wednesday, and the UK’s 30-year yield at 5.563 per cent, after borrowing costs hit their highest level since 1998 earlier in the week.
The benchmark 10-year German yield was at 2.7122 per cent. German industrial orders unexpectedly fell in July, data on Friday showed.
Yields on 30-year Treasuries were at 4.8593 per cent, having touched their lowest in three weeks during Asian trading.
The U.S. dollar eased, with the dollar index down 0.2 per cent at 98.054, while the euro was up 0.2 per cent at $1.1678.
After months of negotiations, the U.S. signed a deal to impose lower auto tariffs on Japan. The dollar was down 0.3 per cent against the yen, with the pair at 148.14.
Oil prices were in their third day of declines. Brent crude futures fell 0.5 per cent to $66.65 a barrel, while U.S. West Texas Intermediate crude eased 0.6 per cent to $63.05.
Gold was steady at $3,546.24, having hit a record peak of $3,578.50 on Wednesday.