(Bloomberg) — Global stock markets retreated on Friday as traders adopted a cautious stance ahead of US jobs data that can offer fresh insight into the health of the economy and the outlook for rates of interest.
Most Read from Bloomberg
Nasdaq 100 futures fell 0.3% while those for the S&P 500 pulled back 0.2%. A Chinese benchmark pushed toward a bear market. Europe’s Stoxx 600 was little modified.
Bonds markets echoed an identical guarded sentiment. UK gilts prolonged this week’s selloff, with the 10-year yield rising by an extra three basis points to 4.84% alongside a retreat in government bonds across Europe. US Treasuries treaded water.
Financial markets have been volatile firstly of the yr, with US yields marching higher as investors moderated their view on the pace of Federal Reserve easing. The anxiety comes as signals of a strong US economy and sticky inflation threaten to maintain rates high.
Friday’s US nonfarm payrolls data is anticipated to indicate a slowdown in hiring in an otherwise robust labor market. Median estimates for the figures forecast that 165,000 jobs were added to the economy in December. The unemployment rate is forecast to carry regular at 4.2% and average hourly earnings growth is seen cooling a touch from a month earlier.
“Given how quickly the Fed hawks have gained ground in recent weeks — and the way rather more investors are excited by dovish signals — the market’s response to soft data could outweigh its response to strong figures,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Several Fed officials confirmed Thursday that the central bank will likely hold rates of interest at current levels for an prolonged period, only cutting again when inflation meaningfully cools.
“The Fed is nervous concerning the incoming administration,” Skyler Weinand, chief investment officer for Regan Capital, said on Bloomberg Television. The mix of the growing US fiscal deficit and a powerful consumer could lead to “higher rates of interest for the following five to 10 years,” he said.
An index of the dollar was little modified. The yen rose 0.2% against the greenback on the back of a report that Bank of Japan officials are prone to discuss raising their inflation outlook. The pound remained under pressure, falling 0.2% after slipping to a greater than one-year low within the prior session.