Global markets stressed ahead of US jobs data

Sydney/New York — Global share markets were under pressure on Friday as investors counted down to a US jobs report later in the day that could worsen or ease the sell-off in the global bond market, while the dollar stood near two-year highs.

Both Nasdaq futures and S&P 500 futures were down 0.3%. Wall Street was closed overnight to mark the funeral of former US President Jimmy Carter.

Pan-European Stoxx 50 futures and UK FTSE futures were flat.

The closely watched US nonfarm payrolls report is due at 1.30pm GMT. Median forecasts are for a rise of 160,000 in jobs in December with unemployment holding at 4.2%.

Anything stronger could see 10-year treasury yields spike to 13-month peaks and lift the dollar in the process.

Analysts at ING believe a print below 150,000 jobs would be needed to stop treasury yields from rising further.

“Payrolls, as always, are a pivotal report. But we need to deviate materially from consensus to have an effect this time around,” said Padhraic Garvey, regional head of research, Americas, at ING.

“Given the move already in treasuries, there is some talk that Friday’s numbers will need to be strong to continue this momentum, and in that sense there is some vulnerability for a lower yield reaction to a consensus outcome.”

In Asia, Japan’s Nikkei fell 0.9%, taking its weekly loss to 1.6%. MSCI’s broadest index of Asia-Pacific shares outside Japan was off 0.5% and headed for a weekly decline of 1.2%.

China’s blue chips slipped 0.4% and Hong Kong’s Hang Seng dropped 0.5%.

Chinese government bond yields climbed after the central bank said it has decided to suspend treasury bond purchases temporarily due to short supply of the bonds.

Overnight, Philadelphia Fed president Patrick Harker said he expected the US central bank to cut interest rates, but added that an imminent move down was not needed. Kansas City Fed president Jeff Schmid signalled a reluctance to cut interest rates.

Markets have already scaled back expectations to around 43 basis points (bps) of US rate cuts for 2025, while concerns about president-elect Donald Trump’s potentially inflationary agenda have helped drive up longer-term yields.

The benchmark 10-year US treasury yield climbed 1.5bps to at 4.6957%, just below an eight-month peak of 4.73% hit on Wednesday. The big chart level is 4.739% and if that breaks, bears would be targeting the psychologically important level of 5%, which has not been seen since 2007.

The climb in treasury yields — up about 9bps this week — has bolstered the dollar index to 109.30, gaining for a sixth consecutive week.

Worry about Britain’s economy have kept the pound under pressure and hit gilts especially hard, driving yields to 16.5-year highs, though they have retreated somewhat.

The pound slipped 0.2% on Friday to $1.2278, having touched its lowest since November 2023 overnight. It is down 1.1% this week.

Oil prices rose on Friday. US West Texas Intermediate crude futures rose 0.5% to $74.32 and were set for a weekly gain of 0.5%.

Gold prices rose 1.3% in the week to $2,674.44/oz, near its highest level since December.

Reuters