Riskier assets were generally higher in the run-up to U.S. jobs data that will shape expectations for the timing of the Federal Reserve’s next interest-rate hike. Equities rallied in Asia and Europe, commodities neared bull-market territory and the Australian dollar gained ground.
The MSCI Asia Pacific Index rose toward a one-month high and the Stoxx Europe 600 Index gained for a second day. The Aussie and New Zealand’s dollar were the best-performing G-10 currencies and the Bloomberg Commodity Index advanced to a seven-month high. Brent crude exceeded $50 a barrel after a report showed U.S. stockpiles declined, while copper gained for the first time this week. The rand fluctuated as South Africa awaited the outcome of an S&P Global Ratings review.
U.S. stocks ended Thursday at levels last seen in November as signs of steady job gains in the world’s biggest economy bolstered speculation that the Fed will raise borrowing costs this month or next. Meetings of the European Central Bank and Organization of Petroleum Exporting Countries failed to have a lasting impact on financial markets and attention has shifted to Friday’s official report on American payrolls. Also on investors’ radars is the U.K.’s June 23 referendum on whether to remain in the European Union, with recent polls indicating growing support for an exit.
“The environment is not bad for risk assets and I expect it to continue, but all the attention is now on the Fed rate hike, including what impact a stronger dollar could have on emerging-market economies,” said Yusuke Kuwayama, a portfolio manager at Tokio Marine & Nichido Fire Insurance Co. in Tokyo. “If the payrolls tonight are strong, we’ll see markets further price in a rate hike by pushing short-term yields higher and giving the dollar a bit of a boost.”
Friday’s U.S. employment figures are forecast to show employers added 160,000 jobs in May, the same as in April. Fed Governor Lael Brainard will be the first U.S. central bank official to speak after the release of the data, while Chicago Fed chief Charles Evans will speak ahead of the report. Fed Chair Janet Yellen speaks Monday, having said a week ago that a rate increase was probable in coming months. Gauges of services output in the U.S. and the euro area are also due Friday.
The Stoxx Europe 600 Index and the MSCI Asia Pacific Index were up 0.3 percent as of 8:13 a.m. London time. Benchmarks in Hong Kong, Singapore and Indonesia climbed to one-month highs, while those in India and Thailand were headed for their best closes since at least October. The Shanghai Composite Index recorded its first weekly increase in more than a month. Japan’s Topix rose 0.4 percent, trimming its weekly loss.
Takata Corp. climbed 1.6 percent in Tokyo as private-equity firms including Bain Capital and KKR & Co. evaluate bids for the scandal-ridden airbag maker. Fast Retailing Co. rallied almost 7 percent after it reported a pickup in sales at it Uniqlo clothing chain. Noble Group Ltd. tumbled 12 percent in Singapore after the commodities trader announced a rights issue to raise about $500 million at a 63 percent discount to Thursday’s close.
Futures on the S&P 500 were little changed after the measure climbed 0.3 percent last session to break 2,100 points, a level that has provided a cap to two rallies in the past eight months. It’s still 1.2 percent below the all-time high reached in May 2015.
The yen rose 0.1 percent versus the greenback, extending this week’s advance to 1.4 percent. The Aussie strengthened 0.3 percent and the kiwi rose 0.4 percent, set for a 2 percent weekly jump. A gauge tracking prices of New Zealand’s commodity exports increased 1 percent in May, data showed Friday.
The Bloomberg Dollar Spot Index was down 0.2 percent for the week. Investors are paying close attention to U.S. data after Fed officials indicated a potential interest-rate hike as soon as this summer was contingent on continued improvement in the economy. Figures released Thursday by the ADP Research Institute indicated 173,000 workers were taken on last month in America, while filings for unemployment benefits declined for a third consecutive week, according to separate data.
The rand was up 0.1 percent, after appreciating 1.5 percent in the last three days. South Africa faces the prospect of having its credit rating cut to junk when S&P announces the outcome of a review on Friday.
The British pound was poised for a 1.4 percent weekly loss. The currency sank in recent days as successive polls indicated British voters are becoming more inclined to vote in favor of leaving the EU.
The yuan was set for a fifth weekly loss, its longest losing streak since December. There’s a growing risk that capital outflows from China may accelerate as the yuan weakens, spilling over into global markets and causing broad selloffs similar to those in January and August, according to Goldman Sachs Group Inc.
The Bloomberg Commodity Index rose 0.3 percent to 86.99. The gauge bottomed this year at a closing low of 72.88 in January, and a finish above 87.45 points would mark a 20 percent advance, meeting the common definition of entry into a bull market.
Brent crude added 0.1 percent to trade at $50.10 a barrel. The third drop in U.S. crude inventories in four weeks tempered the impact of OPEC’s decision to stick to a policy of unfettered production, turning down a proposal to adopt a new ceiling on output.
Copper gained 0.6 percent on the London Metal Exchange, rising with aluminum and zinc. Zinc surged more than 4 percent this week amid speculation dwindling mine supply will fall short of demand. Net-long positions in LME futures for the metal are close to an 11-month high seen in May, indicating that investors continue to bet on a rally.
Soybean futures climbed 1.1 percent, taking this week’s advance to more than 6 percent. Prices surged Thursday amid forecasts for dryer weather in the U.S. growing area.
Australia’s 10-year bonds rose for a third day, pushing their yield down by three basis points to 2.24 percent. The yield on similar-maturity U.S. Treasuries was little changed at 1.80 percent, having been 1.85 percent at the end of last week.
Noble Group’s U.S. currency bonds due January 2020 surged by a record 9.4 cents to 84.3 cents on the dollar following the announcement of the company’s rights issue.
“The company is inflicting pain on equity holders, which is good news for credit investors,” said Leong Wai Hoong, a senior money manager in Singapore at Nikko Asset Management Asia Ltd.