A look at the day ahead in European and global markets from

Ankur Banejee

An action-packed week in the markets is heading for a more

subdued finish as traders await U.S. payrolls data, although the

lingering threat of a trade war kept investors hesitant about

placing major bets.

Stock trading in Asia was mostly directionless with the

notable exception of China, where an AI-fuelled rally sent Hong

Kong's Hang Seng surging to a three-month high on Friday

and its strongest weekly gain in almost four months.

Investors are betting the artificial intelligence advance of

home-grown startup DeepSeek will lead to a boom in the sector,

while for now mostly shrugging off the trade war saga that

kicked off at the start of the week.

U.S. President Donald Trump imposed and then suspended

tariffs on Mexico and Canada early this week but his duties on

Chinese goods went ahead. Beijing followed with retaliatory

measures, seen by most investors as the opening gambit of long,

drawn-out negotiations.

But with little news on whether and when Trump and Chinese

President Xi Jinping would talk, investors are focusing on the

broader economic picture and company earnings.

A social media post could change all that, but for now

things are looking bright for European stock bourses. They have

had a stellar start to the year as investors seize on the

valuation gaps between relatively cheap European stocks and some

of their foreign counterparts.

The pan-European STOXX 600 index, which closed at a

record high on Thursday, has risen 8% since the start of 2025,

while benchmark indexes in Germany and France

are up about 10%. The S&P 500 is up 3% for the same

period.

On Friday, though, futures indicate a subdued open for

European stocks, suggesting a bit of profit-taking might be on

the cards.

The main focus during U.S. trading hours will be the nonfarm

payrolls data, which is expected to show an increase of 170,000

jobs last month after surging 256,000 in December, according to

a Reuters poll of economists.

Slow U.S. job growth in January is unlikely to be enough to

prod the Federal Reserve to resume interest rate cuts before the

end of the first half. Markets are fully pricing in the next 25

basis point cut in July.

Key developments that could influence markets on Friday:

German December industrial and trade data

UK housing price data for January

U.S. payrolls data for January