Global Equities Hit Record, PBOC to Borrow Bonds: Markets Wrap

(Bloomberg) — As traders turn their attention toward Friday’s crucial US jobs data, global equities are scaling record highs.

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In Japan, the Topix index briefly touched another record early Friday, having surpassed the previous high set in 1989 in Thursday’s session. Korean stocks jumped after Samsung earnings beat estimates. UK stock-index futures pointed to gains after exit poll data indicated a big win for the Labour Party in Thursday’s general election.

China’s central bank took the next step toward selling government bonds to cool a record-breaking rally, saying it now has “hundreds of billions” of yuan of the securities at its disposal through agreements with lenders.

A gauge of global stocks is on track for its longest stretch of weekly gains since March, driven by a series of soft US economic data which has revived hopes for the Federal Reserve to start cutting interest rates as soon as September.

“Given other evidence of a cooling economic backdrop—weaker ISM Manufacturing PMI and ISM Service Sector PMI reports — the payroll report could be increasingly decisive for the Fed as it seeks a rationale to signal an easing of rates,” said Quincy Krosby, chief global strategist for LPL Financial.

Emerging market equities also benefited as the MSCI Emerging Markets Index rose to the highest level in two years on Thursday. European shares rallied, led by French equities, following indications that Marine Le Pen’s National Rally party will likely fall short of an absolute majority in second-round elections this weekend.

The yen strengthened for a second day on Friday against the greenback to rebound further from the lowest level since 1986 reached on Wednesday. An index of dollar strength steadied after falling for a third day on Thursday as developing-world currencies were broadly higher, led by the Brazilian real.

The pound was little changed after a run of strengthening that began last week, as investors digested the prospect of a Labour Party victory in Thursday’s general election.

Exit polling data showed Keir Starmer’s Labour Party is projected to win with a huge majority, as Rishi Sunak’s governing Conservatives were on track for their worst-ever performance and would likely see some of the party’s biggest names voted out of Parliament.

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France’s CAC 40 benchmark index advanced for a second day in the buildup to this weekend’s final round of voting in snap parliamentary elections. The gauge extended gains as polls suggested Marine Le Pen’s National Rally and its allies will fall well short of a majority.

Treasury yields were little changed after resuming trading in Asia after the US July 4 holiday. Australian and New Zealand yields were similarly flat.

Reports on Wednesday showed the American services sector contracted at the fastest pace in four years, while the labor market saw further signs of softening before Friday’s key jobs figures.

“With the ISM services yesterday falling to 48.8, the weakest since the pandemic and job claims deteriorating, ultimately the negative data is being seen as positive for markets,” said Justin Onuekwusi, chief investment officer at St James Place. “It feels like September is the date everyone is now looking at.”

West Texas Intermediate, the US oil price, traded flat after rallying earlier in the week. Bitcoin slipped to trade around $57,000.

Key events this week:

• Eurozone retail sales, Friday

• US jobs report, Friday

• Fed’s John Williams speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 11:15 a.m. Tokyo time

• Nikkei 225 futures (OSE) rose 0.4%

• Japan’s Topix was little changed

• Australia’s S&P/ASX 200 was little changed

• Hong Kong’s Hang Seng fell 0.4%

• The Shanghai Composite fell 0.8%

• Euro Stoxx 50 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0816

• The Japanese yen rose 0.1% to 161.04 per dollar

• The offshore yuan was little changed at 7.2910 per dollar

Cryptocurrencies

• Bitcoin fell 2.5% to $56,862.69

• Ether fell 2.2% to $3,072.28

Bonds

Commodities

• West Texas Intermediate crude fell 0.2% to $83.74 a barrel

• Spot gold rose 0.2% to $2,360.45 an ounce

This story was produced with the assistance of Bloomberg Automation.

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