Dollar Gains Before Payrolls; Europe Stocks Drop: Markets Wrap

06/10/2017 13:45 AST

The dollar extended gains to an almost three-month high and Treasury yields rose as confidence in the world’s largest economy grows in the buildup to the latest jobs data. European shares edged lower, bond yields rose and the euro weakened as the Catalonia crisis rumbled on.

Positive sentiment around the U.S. coupled with the uncertain outlook for the separatist campaign in Spain’s biggest regional economy helped offset a surge in German factory orders for European assets. Political risks were also key in the U.K., with the pound dropping to the lowest in a month after a former cabinet colleague announced he is running a campaign to oust Prime Minister Theresa May.

Investor focus will now turn to September’s employment figures from the U.S. in the hope of more good news for the economy, following Thursday’s better-than-forecast American factory orders. Employers probably added 80,000 workers last month, according to the median estimate of economists, with the two major hurricanes that inflicted potentially $90 billion in economic losses likely affecting the data.

“Given this complicating factor, the market reaction to the headline number is likely to be more muted than usual,” according to strategists at HSBC Bank Plc including Peter Barnshaw. “In contrast, the average hourly earnings numbers, which is forecast to increase 0.3 percent on the month, will likely not be distorted so should be even more pertinent than usual.”

Elsewhere, stocks in Japan and Australia climbed, after U.S. stocks closed at yet another record. Oil fell and the gold price was little changed. The Chicago Board Options Exchange volatility index declined to a record low in data going back to 1990.

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Bloomberg