Global stocks edge higher with all eyes on US data

London — Global shares rose on Thursday as the dollar eased before the publication of US jobs data that could offer a steer on the outlook for interest rates, while oil prices surged after Opec+ agreed to cut output.

Investors are anxiously waiting for confirmation from Friday’s US non-farm payrolls report of the resilience of the world’s largest economy.

A mixed picture is forming, after job openings figures suggest hiring is slowing, while measures of private-sector employment and service-sector activity pointed to a stronger September than many had expected.

The dollar, which has been on a seemingly unstoppable upward path this year, retreated on Thursday, feeding some risk appetite and boosting the commodities complex, where oil was holding around its highest in three weeks.

The overarching view, however, is that Friday’s jobs report will do little to weaken the Federal Reserve’s determination to raise interest rates fast to tackle inflation — a view confirmed by a number of central bank officials overnight.

“The Fed officials have been giving out a clear message lately on the goal of getting inflation under control, without being concerned about the domestic economy or the turmoil in the global financial markets,” Saxo Bank strategist Charu Chanana said.

“While the two key indicators, Friday’s monthly payroll report and the monthly CPI data on October 13, could still distort the market pricing of the Fed’s message, that would make the Fed’s job that much harder.”

The MSCI All-World index of global shares was up 0.3% on the day, heading for a week-on-week gain of 5.3%, its largest seven-day increase since the week of March 18 this year. That’s on the heels of September’s 9.7% decline.

Overnight, San Francisco Federal Reserve President Mary Daly underscored the US central bank’s commitment to curbing inflation with more interest rate hikes, though she also said the Fed will not simply barrel ahead if the economy starts to crack.

Complicating the near-term outlook further is next week’s data on US consumer inflation, which is expected to have slowed for a third month in September to 8.1% — still its highest since the mid-1980s.

‘Good news is bad news’

“We’re in two environments right now and the market is trying to decide whether we are in an inflationary or recessionary one,” said Justin Onuekwusi, head of EMEA retail investments at Legal & General Investment Management said.

“What this means in the short term is that good news is bad news as the Fed is seen putting its foot on the brakes harder if we get good data, and if we get weaker data it’s seen as a sign that Fed and other central banks will loosen [monetary policy] earlier,” he said.

US non-farm payrolls data is due on Friday and analysts polled by Reuters expect 250,000 jobs were added last month. That would mark the smallest increase so far in 2022. The unemployment rate is expected to come in at 3.7%.

The dollar eased 0.1% against a basket of major currencies on Thursday, after rising 0.7% the day before, while US Treasury yields were up 2 basis points at 3.78%.

In Europe, stocks bounced back after a dip in the previous session, with investors awaiting more economic data and minutes of the European Central Bank’s September meeting for clues on the pace and path of rate hikes.

The Stoxx 600 index was up 0.5%, while S&P 500 futures fell 0.2%. Nasdaq futures dipped 0.1%, suggesting more modest losses at the opening bell later.

Reuters