PARIS, June 3 — Asian and European stock markets rose today as investors awaited a key US jobs report that could provide fresh clues about central bank action against inflation.
The Frankfurt DAX and Paris CAC 40 both climbed by 0.3 per cent in midday trading.
Tokyo and other Asian indices closed higher. London, Hong Kong and Chinese mainland markets were closed for holidays.
Oil prices, meanwhile, fell a day after the Opec+ group of major oil producing nations led by Saudi Arabia and Russia agreed to raise output more than expected in the wake of a European Union ban on most Russian crude.
All eyes now turn to the US government’s non-farm payroll data, due to be published later today.
US indices had rallied yesterday following a weaker-than-expected reading in a separate US private sector jobs report. A rally in beaten-down tech firms also helped drive healthy Wall Street gains.
The data from payroll firm ADP sparked hopes that the US Federal Reserve may be less aggressive than initially expected in tightening its monetary policy.
The Fed has hiked interest rates to combat decades-high inflation but investors worry that more aggressive moves could backfire and hamper economic growth.
“Seemingly, anything that keeps the Fed from a more aggressive rate-hiking path appears to be greeted with open arms by equities,” said Stephen Innes of SPI Asset Management.
However, Swissquote bank analyst Ipek Ozkardeskaya warned that the Fed “will certainly not change its mind on the soft jobs data”.
“The era when the Fed threw money to the market to boost jobs is behind,” she said.
“We are in a new era, the era of high inflation, and the soft jobs will hardly stop the Fed from hiking the rates.” Fed Vice Chair Lael Brainard has warned she does not yet see any reason to take a breather in the third quarter, as some had hoped.
The Fed is expected to continue tightening monetary policy, with half-point hikes at upcoming meetings. The European Central Bank has indicated it will raise its own rates in July for the first time in over a decade.
Investors also remain on edge over the knock-on effects of the war in Ukraine and China’s zero-Covid policies.
Oil pressure
Elsewhere, oil prices were up today, with Brent North Sea crude, the international benchmark, rising 0.7 per cent at US$116.66 per barrel.
Opec+ agreed yesterday to ramp up output in July by 50 per cent more than in previous months.
Oil prices initially rose, as the increase was not as high as investors had hoped, but they eased today.
“The most anticipated Opec+ meeting of the year turned out to be a damp squib in the end,” said Jeffrey Halley, analyst at online trading platform OANDA.
He noted that the increase of 638,000 barrels per day would be spread among Opec+ members, including Russia and those that have struggled to meet quotas in previous months.
“Given most of Opec can’t even meet their present targets — with only Saudi Arabia, the UAE and possibly Iraq having any sort of spare capacity, and with Russia under sanctions — the entire exercise was nothing more than window dressing,” he said. — AFP
