European stock markets maintained a cautious stance on Friday as investors eagerly anticipated the release of the monthly U.S. jobs report, which is poised to influence the Federal Reserve’s future interest rate decisions.
As of 04:05 ET (08:05 GMT), the German DAX index edged 0.7% higher, the French CAC 40 climbed 0.5%, and the UK’s FTSE 100 rose 0.3%.
Positive Sentiments Boosted by German Factory Orders
Market sentiment received a boost with the release of data indicating a significant uptick in German factory orders, which surged by 3.9% in August compared to a revised 11.3% drop in the previous month. This improvement was largely attributed to a substantial increase in orders for computing, electronic, and optical products.
Furthermore, data from Halifax showed that UK house prices fell by only 0.4% in September, an improvement from the 1.8% drop recorded in the prior month.
Goldman Sachs Positive on Euro Area Economic Growth
Goldman Sachs expressed optimism regarding economic growth in the euro area, projecting a recovery to 1.25%-1.5% in 2024, more than doubling their earlier forecast of approximately 0.5% growth for this year.
However, the bank also highlighted fiscal policy risks, stating, “Fiscal policy poses the main risk to Europe’s growth catch-up in 2024… rising long-term interest rates and slowing nominal growth point to risks that a sharper fiscal adjustment might be required, especially in Italy.”
EU Leaders Summit Focuses on Competitiveness
European Union leaders convened for a summit in Spain on Friday to discuss ways to strengthen the bloc’s competitiveness, particularly in emerging green and digital technologies, and reduce reliance on third countries, notably China. The summit may also touch upon a potential agreement with the U.S. concerning steel and aluminum trade that could prevent the re-imposition of tariffs from the Trump era.
U.S. Jobs Report Takes Center Stage
However, the most significant focus for investors remains the eagerly awaited release of the U.S. jobs report for September. This report is expected to play a pivotal role in shaping the Federal Reserve’s forthcoming decisions regarding interest rates.
The U.S. labor market data for the week has been a mixed bag, with higher-than-expected job openings at the end of August, followed by lower-than-expected private payroll numbers from ADP. While Thursday’s unemployment claims showed a slight increase from the prior week, they remained slightly below expectations.
The Federal Reserve, in its September meeting, kept interest rates unchanged but issued a hawkish assessment of economic conditions, hinting at the possibility of another rate increase this year. This led to a surge in U.S. Treasury yields to 16-year highs.
Notable Corporate Developments
In corporate news, Aviva (LON:AV) saw its stock rise by 7.9% following reports that at least two potential suitors are considering acquiring the insurance company.
Metro Bank (LON:MTRO) experienced an 8% uptick in its stock price after Sky News reported that the lender had initiated discussions with Lloyds Banking Group (LON:LLOY) and NatWest (LON:NWG) regarding the potential purchase of some of its mortgage assets, a move aimed at reducing its capital requirements.
Crude Oil Faces Weekly Decline Amid Economic Concerns
Oil prices edged higher on Friday, but they were on track for their most substantial weekly decline in months due to concerns surrounding a global economic slowdown and its impact on fuel demand. Official U.S. data during the week revealed a significant buildup in gasoline stocks, indicating a decline in gasoline demand in the world’s largest consumer. Investors are now closely watching the U.S. monthly jobs report for insights into the strength of the economy.
As of 04:05 ET, U.S. crude futures traded 0.4% higher at $82.66 a barrel, while the Brent contract saw a 0.3% increase to $84.33. The U.S. crude benchmark is poised for a weekly loss of 9%, marking its most substantial decline since April, while the Brent contract is down more than 11%, on track for its most significant weekly loss since March.
Additionally, gold futures showed a 0.2% increase, reaching $1,834.95 per ounce, while the EUR/USD currency pair traded 0.1% higher at 1.0551.
