Moves in financial markets were mostly modest amid the countdown to key American jobs data that’s seen shaping expectations for the timing of the next U.S. interest-rate hike. Oil rose as Russia said it will seek a deal with major producers to freeze output.
Benchmark stock gauges in Asia and Europe were little changed, as were U.S. equity index futures. South Korea’s won was the best performer among major currencies, while the yen slid toward a one-month low. The Bloomberg Commodity Index snapped a seven-day losing streak as crude pared its biggest weekly drop since January. Gold fell, approaching its lowest close since June. U.S. Treasuries pared their weekly advance and Japanese bond yields rose to levels last seen in March.
The looming jobs data is deterring investors from making bold bets and that’s keeping a lid on volatility in financial markets. Federal Reserve Vice Chairman Stanley Fischer said this week that upcoming economic reports would determine the trajectory of interest-rate increases, having previously highlighted Friday’s payrolls update as being of importance. The figures will come out ahead of this weekend’s Group of 20 summit, with leaders of the world’s biggest economies set to meet in China.
“All eyes are clearly focusing on the nonfarm payrolls data,” said James Woods, a strategist at Rivkin Securities in Sydney. “Even if we do see a strong reading in the payrolls, I don’t really expect that the Fed would act in September. The recent data have been improving and its certainly a good sign but it’s not enough yet to suggest that they have to hike imminently.”
Bets on a September rate increase were reined in on Thursday as a U.S. manufacturing gauge signaled a contraction for the first time in six months. Futures prices indicate a 34 percent chance of a hike this month, down from 42 percent at the end of last week.
The Stoxx Europe 600 Index was up less than 0.2 percent as of 8:34 a.m. London time and the MSCI Asia Pacific Index was little changed. Benchmarks gained in the U.K. and France, while Germany’s was little changed. Hong Kong’s Hang Seng China Enterprises Index added 0.7 percent, the best performance among major stock gauges in Asia.
CK Hutchison Holdings Ltd. jumped as much as 4.3 percent in Hong Kong after receiving European Union approval for a merger involving its Italian assets that will create Italy’s largest wireless provider. Alumina Ltd. climbed the most since March after settling a dispute with its joint-venture partner Alcoa Inc., a move that may spur takeover interest in the Australian company.
Futures on the S&P 500 Index were little changed.
The Bloomberg Dollar Spot Index gained 0.1 percent after slipping 0.4 percent on Thursday, its first loss in a week. U.S. jobs growth slowed to 180,000 last month from 255,000 in July, according to a Bloomberg survey of economists. The yen fell 0.3 percent, extending its weekly slide to 1.7 percent.
“There is potential for markets to whipsaw should we see robust U.S. jobs data tonight,” Sharon Zollner, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a client note. “A stronger U.S. labor market isn’t new news for the Fed or its watchers, rather, it is areas such as manufacturing and retail that are currently causing concern, not to mention a generalized lack of inflation. But nonetheless, payrolls data is traditionally a big market mover, so buckle up.”
South Korea’s won strengthened 0.4 percent, trimming its weekly loss versus the greenback. The central bank raised its second-quarter economic growth estimate to 3.3 percent, having previously announced a 3.2 percent expansion from a year earlier.
The Bloomberg Commodity Index rose 0.3 percent, trimming its weekly slide to 3.1 percent.
Crude oil rose 0.4 percent in New York, after tumbling 9.4 percent over the last four days. U.S. inventories increased last week, keeping supplies at the highest seasonal level in at least three decades, official data showed Wednesday. OPEC members plan to meet this month in Algiers to discuss action to stabilize the market and Saudi Arabia has said a cap on production would be positive. Russian President Vladimir Putin said he’s confident such a deal will be agreed.
Gold fell 0.2 percent, headed for a 0.8 percent weekly loss. The metal retreated since mid-August as hawkish comments by Fed officials spurred speculation a U.S. rate hike is coming, eroding the appeal of assets such as bullion that don’t bear interest.
Most industrial metals rose on Friday in London, led by a 0.7 percent advance in tin. Lead, tin and zinc all climbed to levels last seen in the first half of 2015, having been buoyed by data on Thursday that indicated manufacturing is picking up in China, the world’s second-biggest economy.
U.S. Treasuries pared their weekly advance, with the two-year yield increasing by one basis point to 0.79 percent. It’s still down five basis points for the week.
“The Fed has kept open the possibility of raising rates in September, but it’s also said that it’s data dependent — so the risk of something disappointing is high,” said Janu Chan, a senior economist at St. George Bank Ltd. in Sydney. “It’s about jobs and inflation. Payrolls is the most important piece of data that will guide the Fed.”
Japanese government bonds due in a decade or more declined amid uncertainty over whether the Bank of Japan will tweak its debt-buying program this month and concern over demand at upcoming auctions. The 10-year yield touched minus 0.02 percent, the highest since March.
“Yields are rising on wariness that the BOJ might reduce purchases in the super-long sectors when it meets this month,” said Souichi Takeyama, a rates strategist at SMBC Nikko Securities Inc. in Tokyo. “Rising volatility is also raising concerns about demand at a slew of auctions this month, putting upward pressure on yields in these maturities.”