Stocks skip higher ahead of U.S. jobs data
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[July 02, 2020]
By Marc Jones
LONDON (Reuters) - World stocks rose for a
fourth straight day on Thursday as encouraging coronavirus vaccine
trials kept investors' spirits up ahead of what was expected to be a
record rebound in U.S. jobs figures later.
Economists polled by Reuters expect a bumper 3 million U.S. jobs to have
been added in June on top of the 2.5 million created in May, and some
generally reassuring data from both Asia and Europe this week.
Despite the ongoing rise in global virus cases, Asian equity markets saw
their biggest daily rise in over two weeks overnight, aided by news that
a vaccine being trialled by Pfizer and Germany's BioNTech had been well
tolerated in early-stage human tests.
Europe made a strong start, with banking, travel and carmaker stocks
driving 1-2% gains for its main bourses, and the euro helped back up
towards $1.13 by another drop in the dollar.
"The big thing today is the U.S. non-farm payrolls... but by and large
risk has been bid and the dollar has been weakening," said RBC FX
strategist Alvin Tan.
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"What has really helped sentiment (in the last 24 hours) has been some
of the preliminary results on a vaccine".
A vaccine for COVID-19, which has now killed more than half a million
people globally and sent the world economy into deep recession, has been
long anticipated.
In a sign the positive sentiment will extend, E-minis for S&P500 rose
0.8%, while bond markets were also favouring risk over safety.
The 10-year Germany Bund yield broke above -0.4% for the first time in a
week in its biggest daily jump in a month after improved euro zone
manufacturing data the previous day, while Portugal's borrowing costs
hit a 3-month low.
All major Asian indexes had been upbeat. Japan's Nikkei rose only
fractionally, but China's blue-chip index added 2% and Hong Kong's Hang
Seng jumped 2.8% as investors brushed off concerns over sweeping new
security laws introduced by Beijing.
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The German share price index DAX graph is pictured at the stock
exchange in Frankfurt, Germany, May 4, 2020. REUTERS/Staff
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JOBS VS THE VIRUS
Attention was quickly turning to the U.S. employment figures later
that will feed debate on whether the world's largest economy can
sustain its fragile recovery in the face of rising COVID-19 cases in
some key parts of the country.
"A better-than-expected outcome could go some way to settling the
near-term debate that the U.S. labor market will heal relatively
quickly and justify new highs in U.S. equities," said Stephen Innes,
strategist at AxiCorp.
In commodities, the most-traded August copper contract on the
Shanghai Futures Exchange touched 49,570 yuan ($7,016.28) a tonne,
its highest of the year.
Top copper consumer China posted better-than-expected manufacturing
data in June, while U.S. manufacturing activity rebounded and the
factory sector in Germany contracted at a slower pace.
In Chile, where the number of COVID-19 cases have been climbing,
miner BHP said it would begin to slow production at its small Cerro
Colorado copper mine.
Oil prices climbed and gold eased as encouraging macro data prompted
investors to take on more risk.
Brent crude climbed 30 cents to $42.37 a barrel. U.S. crude rose 35
cents to $40.17 a barrel. U.S. gold futures were 0.21% lower, at
$1,776.20.
The dollar was largely unchanged against the Japanese yen at 107.45.
The euro was higher at $1.1293, sterling rose to $1.2520 and the
risk-sensitive Australian and New Zealand dollars were 0.3% and 0.5%
stronger respectively.
(Additional reporting by Swati Pandey in Sydney; Editing by Jan
Harvey)
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