A look at the day ahead in European and global markets from
Stella Qiu
Global shares are pulling back after a bumper quarter.
Quarter-end rebalancing was partly to blame but there are also
bubbling concerns about how long the AI party will go on. News
that Meta plans to sell excess AI compute does make one wonder
if it still has the need to buy all those hot chips.
Asia took an early kicking. South Korea was initially
hammered nearly 7% on heavy selling in chipmakers including SK
Hynix and Samsung Electronics ( SSNLF ), though
the rout has abated somewhat. The KOSPI was last off 3% and
Japan's Nikkei was down 1.2%. European bourses are bracing for a
flat open, with pan-region stock futures up 0.1%.
Nasdaq futures rose 0.3% and S&P 500 futures
were 0.2% higher.
Hereafter, the focus will be on the U.S. nonfarm payrolls
report, arriving a day early due to the Independence Day holiday
on July 4.
Economists expect a median rise of 110,000 jobs in June, but
forecasts range widely from 25,000 to 200,000. The football
World Cup has probably created thousands of temporary jobs,
adding to the high chance of an upside surprise. The jobless
rate is forecast to stay steady at 4.3%.
Treasury yields have been climbing in anticipation of some
strong numbers, with two-year yields up 9 basis points on the
week so far, regardless of what Federal Reserve Chair Kevin
Warsh said about inflation riskcoming down.
A jobs beat will likely add to market pricing for policy
tightening from the Fed this year, with a move in September
about 80% priced in, while a weak result would ease pressure for
any interest rate hikes this year.
Global central banks are finding solace in oil prices which
hit another four-month low on Thursday. European Central Bank
President Christine Lagarde said inflation and growth risks were
more broadly balanced now, as markets pare back the possibility
of an ECB rate hike.
The euro zone unemployment rate for May is also due later in
the day, where the forecast is for a steady 6.3%. Inflation
eased more than expected to 2.8% in June.
The yen hovered near a 40-year low at 162.52 a dollar, with
the U.S. jobs data likely to be pivotal in determining its
near-term fate. Japan has stepped up intervention rhetoric but
has not been seen in the market yet.
Rather, sources said officials are abandoning their habit of
telegraphing intervention, instead planning a more calculated
campaign to squeeze short positions and raise the cost of
betting against the yen.
Key developments that could influence markets on Thursday:
* US payrolls report for June
* Euro zone unemployment rate for May
* Federal Reserve Bank of San Francisco President Mary Daly
speaks in Spain