Global equities reach record high ahead of US jobs data

Global stocks traded at all-time highs before crucial US jobs data that’s expected to show some moderation in hiring. The pound notched its longest winning streak in four years as the Labour Party swept to power in the UK’s general election.

A series of soft US economic readings has revived hopes that the Federal Reserve will start cutting interest rates as soon as September, pushing MSCI Inc.’s world index to a record. European stocks rose for a third day, while US futures pointed to a steady open when Wall Street returns from Thursday’s holiday. Tesla Inc. rose in US premarket, on track to turn positive for 2024 after a seven-day winning streak that’s added about $200 billion in market value. 

“Given other evidence of a cooling economic backdrop — weaker ISM Manufacturing PMI and ISM Service Sector PMI reports — the payroll report could be increasingly decisive for the Fed as it seeks a rationale to signal an easing of rates,” said Quincy Krosby, chief global strategist for LPL Financial.

In contrast with the positive tone for equities, Bitcoin sank to the lowest since February, dropping for a fourth session as part of a wider crypto selloff. Crypto speculators currently face a range of challenges, including waning demand for US Bitcoin exchange-traded funds and signs that governments are disposing of seized tokens. Crypto-related shares fell.

In the UK, stocks and government bonds rose and the pound strengthened for a seventh day after Labour won a majority, giving it a clear mandate to deliver on its pledge for greater economic stability. Keir Starmer’s party passed 400 of the 650 seats in the House of Commons, securing its long-predicted landslide victory. 

“A clear majority could bring some much-needed stability to the UK political landscape at a time of heightened global uncertainty,” said Samuel Zief, head of global FX strategy at J.P. Morgan Private Bank. That “could provide a bit of a kicker for the pound,” he said.

France’s CAC40 also rose for a third day, following indications that Marine Le Pen’s National Rally party will likely fall short of an absolute majority in second-round elections this weekend.

Still, no matter which party comes out on top in the French parliamentary vote, some investors are betting it marks the beginning of a more turbulent period for the country’s stock and bond markets. The CAC 40 has been the worst performer among major European stock indexes since the snap election was called last month, while at the height of the selloff a metric of bond-market risk soared to its highest since the sovereign debt crisis.

An index of dollar strength slipped for a fourth day, while Treasury yields ticked lower as traders looked ahead to the jobs report. 

Payrolls probably rose by 190,000 in June, a step-down in hiring from the previous month, according to the median estimate in a Bloomberg survey. Average hourly earnings likely increased 3.9% from a year earlier, the least in three years. The unemployment rate is seen holding at 4%, the highest level in more than two years.

“The US data will be very interesting for a couple of reasons — you see signs of a bit of a slowdown in the labor market, and the market appears for now to have taken that in stride because it does raise the possibility of an easier monetary policy going down the track,” said Richard Flax, chief investment officer at European digital wealth manager Moneyfarm.

In Asia, Japan’s Topix index briefly touched another record early Friday, having surpassed the previous high set in 1989 in Thursday’s session. Chinese stocks have fallen for seven straight weeks — the longest losing streak since early 2012 — as investor sentiment continues to weaken ahead of a key policy meeting this month. 

The yen strengthened for a second day against the greenback to rebound further from the lowest level since 1986 reached on Wednesday. China’s central bank took the next step toward selling government bonds to cool a record-breaking rally, saying it now has “hundreds of billions” of yuan of the securities at its disposal through agreements with lenders.

Oil traded near a two-month high as Hurricane Beryl portended a potentially worse storm season, while shrinking US crude stockpiles hinted at improved demand. Gold headed for a back-to-back weekly gain. 

Key events this week:

• Eurozone retail sales, Friday
• US jobs report, Friday
• Fed’s John Williams speaks, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.4% as of 9:25 a.m. London time
• S&P 500 futures were little changed
• Nasdaq 100 futures rose 0.2%
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index was little changed
• The MSCI Emerging Markets Index rose 0.1%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro rose 0.1% to $1.0825
• The Japanese yen rose 0.3% to 160.79 per dollar
• The offshore yuan was little changed at 7.2873 per dollar
• The British pound rose 0.1% to $1.2776

Cryptocurrencies

• Bitcoin fell 6.9% to $54,289.84
• Ether fell 8.5% to $2,875.2

Bonds

• The yield on 10-year Treasuries declined two basis points to 4.34%
• Germany’s 10-year yield declined one basis point to 2.60%
• Britain’s 10-year yield declined three basis points to 4.16%

Commodities

• Brent crude was little changed
• Spot gold rose 0.4% to $2,366.55 an ounce

This story was produced with the assistance of Bloomberg Automation.