Dubai – Energy stocks rallied, leading a third day of gains for European equities as crude prices bounced. Treasuries halted the longest losing streak in five years before a US jobs report expected to bolster the case for a rate hike next week.
The yield on 10-year US Treasuries fluctuated before edging lower for the first time in 10 days. Crude’s advance from a three-month low wasn’t enough to climb above $50 a barrel, but it boosted oil and energy shares in Europe. Gold slid below $1 200 per ounce, dropping for a fifth day, its longest losing run since October.
Friday’s American jobs report is the last major piece of economic data before the Federal Reserve meets next week, with markets pricing a rate increase as a near certainty.
In Europe, while the ECB stuck by its planned stimulus and forward guidance on Thursday, President Mario Draghi acknowledged the upbeat economic outlook by adding later that it’s less likely that rates will have to be cut, and that there’s no longer a “sense of urgency” in monetary policy.
“Disappointment this afternoon seems very unlikely,” Vincent Juvyns, global market strategist at JPMorgan Asset Management, told Bloomberg Radio’s Nejra Cehic.
“All the data point toward a Fed rate hike in March. We might see some repricing downwards if we have a weak report. A very strong report could make the case for four rate hikes this year. The market is adjusting itself for the reflation theme which is day by day getting more traction.”
What’s ahead for markets:
Official US jobs data for February are due on Friday. Employers probably added around 200 000 workers to payrolls, in line with the average over the past six months and a sign of steady growth, economists forecast.
Here are the main market moves:
The Bloomberg Dollar Spot Index dropped less than 0.1% as of 14:03. The euro gained 0.3% to $1.0609, rising a second day while the British pound was little changed at $1.2157. The yen fell 0.5% to ¥115.42/$, its lowest level versus the greenback since January 19 in a fourth day of declines.
The Stoxx Europe 600 Index rose 0.5%, as the FTSE 100 gained 0.5%. Futures on the S&P 500 added 0.4%.
The yield on the US Treasury note due in a decade was little changed at 2.61%. It climbed five basis points on Thursday to exceed the 2.6% mark that Bill Gross, the bond-market veteran at Janus Capital Management, said will signal the start of a bear market, should it hold on a weekly basis.
European bonds were mixed after Mario Draghi said the ECB committee discussed altering its forward guidance on rates, striking a more hawkish stance. German benchmarks fell with the 10-year yield adding two basis points to 0.45% while Greek, Spanish and Portuguese bonds gained.
WTI crude was up 0.7% at $49.62 per barrel. It fell 2% on Thursday to the lowest close since November 29. Gold fell 0.4% to $1 196.75 per ounce.