(Bloomberg) -- US equity futures ticked higher before the monthly US jobs report that’s likely to enliven the recession debate. Treasury yields and the dollar steadied.
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Contracts on the S&P 500 posted modest gains, while those on the Nasdaq 100 were little changed and just short of a 20% rebound from its June low that would meet the technical definition of a bull market. Stocks in Europe were in the red, with he Stoxx Europe 600 Index weighed by energy and media firms.
A global equity index is set for a third weekly advance and near a two-month peak in a recovery from bear-market lows, helped by resilient US company profits. The durability of the bounce remains in doubt as central banks around the world speed up rate hikes, and the inversion between two-year and 10-year yields remains near the deepest since 2000, harkening imminent recession.
The stock rally is being fed by speculation that runaway inflation may have peaked and the Fed can temper interest-rate increases.
The payrolls report, due at 8:30 am New York time, could shift bets on the course of US central bank policy, with an above-expectation reading seen as emboldening the Fed to press on with outsized hikes.
Hiring likely softened in July with economists forecasting that employers added 250,000 jobs. But the labor market remains consistent with an expanding rather than recessionary economy and the Fed will persevere, according to Bloomberg Economics.
“The equity market in the last month has managed to turn both hawkish and dovish data into a reason for cheer, which obviously is rather self-serving and unsustainable in the medium term,” said James Athey, investment director at Abrdn. “I would continue to be a seller of equity strength given my view that the path for the economy most certainly remains down.”
The 10-year Treasury yield was steady at about 2.7% after sinking from an 11-year high of almost 3.5%. That’s driven a move back into defensive shares, especially tech stocks, that typically benefit from ebbing duration risk.
Meanwhile, tensions between the US and China continued to simmer, as China announced it would halt cooperation with the US in a number of areas following US House Speaker Nancy Pelosi’s trip to Taiwan, including working-level talks on climate change and defense.
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Some of the main moves in markets:
Stocks
Futures on the S&P 500 rose 0.1% as of 8:02 a.m. New York time
Futures on the Nasdaq 100 were little changed
Futures on the Dow Jones Industrial Average rose 0.2%
The Stoxx Europe 600 fell 0.2%
The MSCI World index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index rose 0.1%
The euro fell 0.1% to $1.0231
The British pound fell 0.2% to $1.2140
The Japanese yen fell 0.2% to 133.14 per dollar
Bonds
The yield on 10-year Treasuries was little changed at 2.70%
Germany’s 10-year yield advanced four basis points to 0.84%
Britain’s 10-year yield advanced three basis points to 1.92%
Commodities
West Texas Intermediate crude fell 0.4% to $88.19 a barrel
Gold futures fell 0.2% to $1,803.40 an ounce
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