Global Markets: Futures steady ahead of US jobs data, tariff reprieve

Federated Hermes

07/02/2025 12:13

(Updates with US premarket prices)

        * 
      European stocks head for 7th weekly gain
    

        * 
      Yen at two-month high on rate hike bets
    

        * 
      Gold steady near record peak
    

  
    By Amanda Cooper
       LONDON, Feb 7 (Reuters) - 
    U.S. stock futures steadied on Friday ahead of U.S. payrolls
data, with investors cautiously optimistic that the world might
avoid a full-on trade war, while the prospect of more rate hikes
in Japan this year briefly sent the yen towards two-month highs.
    In a week that started with U.S. President Donald Trump
kicking off a trade war and whipping up market volatility,
investors have been wary of making any major moves, given that
he followed through on his threat to impose duties on China
while granting Mexico and Canada a one-month reprieve.
    The all-important U.S. jobs report for January is due ahead
of the Wall Street open. Economists expect to see 170,000
workers added to nonfarm payrolls last month, but given the
potential distortions from spells of cold weather and the
California wildfires, the range of forecasts is wide. 
    "The focus for the financial markets in recent weeks has
been very much on Trump and his economic policies, in particular
on trade, but today there is the potential for the jobs data to
influence Fed rate expectations," Derek Halpenny, a currency
strategist at MUFG, said.
    "A pretty large divergence from the consensus is still
likely required to shift expectations notably but extreme
weather at this time of the year has in the past resulted in
sharply weaker NFP readings and weather could impact today’s
report," he said.
        Futures on the Nasdaq  NQc1  and S&P 500  EScv1  were
trading mostly steady on the day, while shares of 
    Amazon
      AMZN.O  slipped in premarket trading on the back of 
    weakness
     in the retailer's cloud unit.
  
    In Europe, the STOXX 600  .STOXX  headed for a seventh
straight week of gains, trading flat on the day after having hit
record highs earlier this week, following a spate of strong
earnings from the likes of Danish weight-loss drugmaker Novo
Nordisk  NOVOb.CO , German software company SAP  SAPG.DE  and
French lender BNP Paribas  BNPP.PA .    
    European stocks have staged their best performance in a
decade against Wall Street in the first six weeks of 2025, but
the focus is now on whether those gains can be sustained.
    On the Asian market, tech stocks staged a rally, powered by
Chinese retail investors, who have pounced on the AI theme in
the wake of home-grown start-up DeepSeek's breakthrough.
    
    DELICATE CHINA
    Beijing's seemingly measured response to Trump's tariffs has
left room for negotiations, analysts say, which has helped
repair investor sentiment.
    China's blue-chip stock index  .CSI300  closed up 1.3% after
touching a one-month high.
    "Whilst there is considerable noise and uncertainty, we
don't see escalating trade tensions as a game changer in the
prospects for the Chinese market," said James Cook, investment
director for emerging markets at Federated Hermes.
    "China's bigger problem is not Trump but the domestic
economy."
    While political uncertainties kept investors wary, fears
have eased that Trump's approach to tariffs could escalate into
a global trade war.
    
  
    Markets are pricing in 43 basis points of easing this year
from the Fed, with a rate cut in July fully priced in, as
policymakers are in no hurry to start the rate-cutting cycle
again.
    The dollar  =USD  edged up 0.1% against a basket of
currencies, having rallied 7% last year, as investors priced in
a far more aggressive policy stance from the Fed this year,
where rate cuts may be few and far between.
    Other central banks are cutting interest rates, while the
Bank of Japan is gearing up for at least another rate hike this
year. Strong wage growth data has beefed up the chances of
tighter monetary policy, which has pushed the yen to two-month
highs against the dollar  JPY=EBS .
        The yen touched 150.96 per dollar overnight, its
strongest level since December 10, before easing to leave the
dollar up 0.4% on the day at 152.155.
  
    Sterling  GBP=D3  reversed earlier losses to rise 0.1% to
$1.2449, having dropped 0.5% on Thursday as the BoE cut interest
rates and slashed its 2025 UK growth forecast.
    In commodities, oil edged up, while gold  XAU=  steadied
above $2,800 an ounce, close to record highs.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Continuing claims and JOLTS hires    https://reut.rs/4aMVb6g
European stocks stellar start to 2025    https://reut.rs/3WS5Iap
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 (Additional reporting by Ankur Banerjee in Singapore;
additional reporting by Stephen Culp, Marc Jones and Alun John;
editing by Shri Navaratnam, Sam Holmes, Gareth Jones and Angus
MacSwan)
 ((stephen.culp@thomsonreuters.com; 646-223-6076;))