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- US stocks looked set to record their seventh day of gains ahead of jobs data on Friday.
- WTI crude oil prices traded above $75 a barrel for the first time since late-2018.
- Xi Jinping’s hawkish comments on geopolitics are continuing to weigh on Asian equities.
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US stocks were set to log their seventh day of record highs on Friday as investors looked forward to a major indicator of recovery, the Labor Department’s June jobs report.
Futures on the Dow Jones, S&P 500, and Nasdaq rose 0.2%, suggesting a higher start to trading later on.
Deutsche Bank’s US economists expect monthly non-farm payroll data, due later on Friday, to show a 700,000 gain for the month, which should help cut the unemployment rate to a post-pandemic low of 5.7%.
Weekly jobless claims data on Thursday showed the number of Americans filing for unemployment insurance sank to a post-pandemic low of 364,000, versus 388,000 expected, for the week through June 26.
Markets got the second half of the year off to a strong start on Thursday, with risk assets resuming their upward march, Deutsche Bank research strategist Jim Reid said. “Indeed, the mood was pretty buoyant across multiple asset classes,” he added.
The VIX index, which measures the market’s expectations of volatility in the coming 30 days, fell -0.4 points to 15.41 to reach its lowest level since the pandemic began.
While volatility is subdued, the potential catalysts that could cause it to flare up again include inflation concerns, persistent COVID-19 worries, and ongoing geopolitical tensions, according to UBS.
“Although we believe a risk-on stance is still warranted, we think investors can use this period of low volatility to ensure their portfolios are prepared for any turbulence ahead,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said.
Elsewhere in Europe, the UK reported more than 27,000 new COVID-19 cases on Thursday – its highest level since the end of January. But equities followed Wall Street in tracking the closely-watched US jobs report.
London’s FTSE 100 rose 0.4% and Frankfurt’s DAX rose 0.5%. The pan-European Euro Stoxx 600 rose 0.5%, with travel and leisure stocks climbing 1.2% to lead gains.
West Texas Intermediate crude oil prices traded above $75 a barrel for a second day on Friday, a near three-year high, ahead of a key OPEC decision on production policy for the second half of the year. But a standoff between the UAE and other key exporters could mean the group may not increase production at all, Bloomberg reported, citing a source. Brent crude was meanwhile trading slightly lower on the day at $75.71 a barrel.
Asian markets fell a day after Xi Jinping marked the centennial of the Chinese Communist party’s founding with a nationalistic address in Beijing. It seems likely that his hawkish comments on geopolitics are continuing to weigh on the region’s markets, Deutsche’s Reid said.
The Shanghai Composite fell 1.95%, Hong Kong’s Hang Seng fell 1.9%, while Tokyo’s Nikkei rose 0.2%.
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