(RTTNews) – European stocks are set to open higher on Friday as soft U.S. jobs data spurred traders to pare rate hike bets.
Overnight data showed U.S. jobs growth slowed sharply in June, and the two prior months’ data were revised lower, raising expectations that the Fed will hold rates this month and potentially in September.
The June jobs report also challenged the narrative that the Fed may hike rates in the second half of this year.
Closer home, the eurozone is getting closer to price stability after inflation in the region cooled down in June.
There is now reduced emergency for immediate action and investors see only a one-in-three chance of a July hike.
On the geopolitical front, U.S. President Donald Trump said in an interview with CNBC that talks with Iran are moving forward and that Tehran has agreed to “just about everything we need.”
Trump claimed that Iran will buy U.S. agricultural products as part of a potential peace agreement to end the war – a statement that Iran has refuted.
Meanwhile, Iran’s main military command, Khatam al-Anbiya Central Headquarters said that the Strait of Hormuz is not the “aggressive U.S. playground” and that any U.S. interference in the vital waterway will be met with a “decisive and swift” response.
Asian markets were mostly higher despite an overnight fall in U.S. technology stocks.
A private survey showed earlier today that China’s services activity eased less than expected in June as export orders hit a 20-month high.
The U.S. dollar was on track for its biggest weekly drop in nearly three months, while gold rose towards $4,200 an ounce and headed for its first weekly rise in five on easing Fed rate hike bets.
Brent crude futures were modestly higher above $72 a barrel, hovering near levels last seen before the Middle East conflict in late February on signs of improved shipping activity through the Strait of Hormuz and progress in U.S.-Iran talks.
Overnight, U.S. stocks ended mixed as a sell-off continued in the chip sector and weak jobs data prompted traders to trim bets on a Federal Reserve interest-rate increase this month.
Data showed the U.S. economy added 57,000 jobs in June, compared with the 114,000 expected and the downwardly revised 129,000 added in May.
The unemployment rate ticked down to 4.2 percent as more people left the labor force, pushing the participation rate to the lowest level in more than five years.
In other economic news, there was a steep drop in new orders for U.S. manufactured goods in May, while applications for jobless aid unexpectedly inched down last week.
The Dow jumped 1.1 percent to notch a record close ahead of the Independence Day holiday, while the S&P 500 ended little changed and the tech-heavy Nasdaq Composite shed 0.8 percent.
European stocks closed on a buoyant note on Thursday as inflation concerns eased and Germany’s national coalition agreed on sweeping tax, labor and pension reforms.
The pan- European Stoxx 600 gained 1.4 percent. The German DAX surged 2.2 percent, while France’s CAC 40 and the U.K.s FTSE 100 both rallied about 1.7 percent.
