US futures were steady after Friday’s US payroll data helped take the underlying S&P 500 index to the cusp of a bull market. Oil advanced on the back of Saudi Arabia’s pledge to cut production.
(Bloomberg) — US futures were steady after Friday’s US payroll data helped take the underlying S&P 500 index to the cusp of a bull market. Oil advanced on the back of Saudi Arabia’s pledge to cut production.
In Europe, stocks edged higher, following gains for benchmarks in Asia. In Tokyo, the Nikkei 225 climbed as much as 2%, headed for its highest close since July 1990, helped by a sharp weakening of the yen last week.
The S&P 500 closed just a few points away from entering a bull market on Friday — a level which would see it rising 20% from its October low. Ahead of the payroll report last week, Federal Reserve officials had signaled that they plan to keep rates steady in June, while retaining the option to hike further in coming months.
Oil advanced at the week’s open after Saudi Arabia said it will make an extra 1 million barrel-a-day supply cut in July, taking its production to the lowest level for several years following a slide in prices. West Texas Intermediate jumped almost 5% early in the session before paring gains to trade near $73 a barrel.
Two-year Treasury yields rose six basis points, after jumping 16 basis points on Friday. The dollar strengthened against all its Group-of-10 peers.
“The surge in US payrolls has stoked another leg higher in US yields and reinforced the Fed’s preferred view that a resilient economy means a steady hand in June is a likely rate-hike ‘skip’ rather than an extended pause,” said Sean Callow, senior currency strategist at Westpac Banking Corp. “The previously enthusiastic forecasters of a US recession have gone a bit quiet.”
The jobs report shaped wagers on the Fed, with signs of labor-market slackening in May despite a pickup in hiring. That bolstered the argument from Fed Chair Jerome Powell and other officials that they should take more time to assess incoming data and the evolving outlook before raising rates again.
“The question is, is June is really a coin flip at this point?” Nancy Davis, founder of Quadratic Capital Management, said on Bloomberg Television, referring to the Fed’s June meeting. “With this jobs number, it’s harder for the Fed to pause, but I do think the Fed can also turn around and use their balance sheet more to help solve the inflation problem.”
The yen weakened back past 140 to the US currency. Asset managers have joined hedge funds in increasing yen-short positions amid speculation the Bank of Japan isn’t likely to rush to adjust its ultra-easy monetary policy. They boosted bearish bets to the most so far for 2023 in the five days through May 30, Commodity Futures Trading Commission data show.
Meanwhile, Morgan Stanley sees the possibility of a 16% profit drop for the S&P 500 this year that would slam the brakes on a US equity rally. The prediction is one of the most bearish among those tracked by Bloomberg, and contrasts with bullish forecasts from the likes of Goldman Sachs Group Inc., which anticipates mild growth.
Key events this week:
- Eurozone S&P Global Eurozone Services PMI, PPI, Monday
- US factory orders, ISM services, Monday
- ECB President Christine Lagarde appears in European Parliament, Monday
- Rate decisions in Australia, Poland, Tuesday
- China forex reserves, trade, Wednesday
- US trade, consumer credit, Wednesday
- Canada rate decision, Wednesday
- EIA crude oil inventory data, Wednesday
- Eurozone GDP, Thursday
- Rate decisions in India, Peru, Thursday
- Japan GDP, Thursday
- US wholesale inventories, initial jobless claims, Thursday
- China PPI, CPI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 3:22 a.m. New York time
- Nasdaq 100 futures fell 0.2%
- Futures on the Dow Jones Industrial Average were little changed
- The Stoxx Europe 600 was little changed
- The MSCI World index was little changed
- The MSCI Asia Pacific Index rose 0.5%
- The MSCI Emerging Markets Index was little changed
Currencies
- The Bloomberg Dollar Spot Index rose 0.2%
- The euro fell 0.2% to $1.0685
- The British pound fell 0.5% to $1.2391
- The Japanese yen fell 0.4% to 140.43 per dollar
- The offshore yuan fell 0.3% to 7.1319 per dollar
Cryptocurrencies
- Bitcoin fell 1.6% to $26,813.81
- Ether fell 1.7% to $1,872.18
Bonds
- The yield on 10-year Treasuries advanced five basis points to 3.74%
- Germany’s 10-year yield advanced six basis points to 2.38%
- Britain’s 10-year yield advanced six basis points to 4.22%
Commodities
- West Texas Intermediate crude rose 1.7% to $72.99 a barrel
- Gold futures fell 0.6% to $1,957.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Hooyeon Kim.
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