European stocks traded near record highs, global bonds rose and gold extended its surge amid conviction US and euro-area interest rates will fall in coming months, a view economists expect will be backed by American jobs data later Friday.
The pan-European Stoxx 600 index was steady and on track for a seventh week of gains, after a weaker inflation forecast from the European Central Bank reinforced the view that monetary easing will begin in June. That was followed by Federal Reserve Chair Jerome Powell suggesting the Fed is getting close to the confidence it needs to start lowering rates. US equity futures kept to narrow ranges.
Powell’s comments sent benchmark 10-year Treasury yields to a one-month low, while the dollar skidded for the sixth day in a row. Gold surged above $2,160 an ounce, rising for an eighth day. In currency markets, the yen extended gains on wagers the Bank of Japan will exit its ultra-loose policy later this month.
Focus is now firmly on US employment data, with the consensus forecasting that 200,000 new jobs were created last month, well down from January’s 353,000. Hourly wage growth is also expected to slow.
While Fed rate-cut bets now center around June, Derek Halpenny at MUFG Bank Ltd. said that view could change.
“A much weaker non-farm payrolls print today — close to 100,000 rather than the 200,000 consensus — with a weaker earnings increase could bring May back into play,” Halpenny wrote. “There is certainly a risk of a bigger dollar move on a weaker payrolls print.”
Among individual European stock movers, HelloFresh SE plunged by a record 42% after the meal-kit firm said it no longer expects to achieve previously provided 2025 goals. Vivendi SE dropped after saying it will consult with investors and employees on its plan to split into four listed units. DS Smith Plc rallied 7% after Mondi Plc agreed to buy the company for £5.1 billion ($6.5 billion) to create one of the largest makers of packaging.