A look at the day ahead in U.S. and global markets from Mike Dolan
After a frenetic week of G7 interest rate cuts, new records for stocks, another scramble for AI and a wave of elections, world markets have frozen awaiting the U.S. employment report.
The May payrolls report comes just ahead of next week's Federal Reserve meeting and most of the labor market updates in recent days have indicated a gradual cooling in employment.
For the record, consensus forecasts indicate non-farm payrolls growth picked up a touch last month to 185,000 from 175,000 in April - and the monthly rise in average earnings also ticked higher to 0.3%.
But the unemployment rate is set to remain at 3.9% and if that holds, Deutsche Bank (ETR:DBKGn) strategists point out, it will mark the 28th month below 4% - the longest such stretch since the 1950s.
It would have to be a shocker for recession alarm bells to sound and would need to jump as high as 4.3% to trigger the oft-cited "Sahm rule". Developed by former Fed economist Claudia Sahm, it suggests a recession red flag if the rolling three-month average jobless rate rises half a point above the low of the prior 12 months.
But the cooler labor market seen this week in weekly unemployment claims, falling vacancies and a contracting service sector jobs components has already seen Fed rate cut expectations revived to two quarter-point moves this year, starting in September.
And 10-year Treasury yields <US10YT=RR are hovering at two-month lows and the dollar is on the back foot near eight-week lows too.
MSCI's world share index stalled in advance of the report after touching an all-time high on Thursday and Wall Street stock futures were flat ahead of the bell.
Oil steadied as OPEC+ members Saudi Arabia and Russia indicated readiness to pause or reverse oil output increases, but crude was still headed for its third straight weekly loss on demand concerns.
China's stocks were once again in downbeat mood and a notable underperformer in Asia even though the country's May export numbers beat forecasts.
But against global concerns about a fresh Chinese export push to flatter an economy suffering from still-fragile domestic consumption, the big concern import growth slowing much more than expected to just 1.8% from a 8.4% jump in the previous month.
Chinese stocks were also hit by a report that U.S. lawmakers pushed to ban Chinese battery firms with ties to Ford and Volkswagen (ETR:VOWG_p) from exporting to the United States.
In Europe, stock markets slipped back and the euro was slightly firmer after the European Central Bank on Thursday delivered its long-telegraphed first rate cut - but sowed some doubts about the extent and speed of further easing from here.
Markets don't see another cut before September.
And after the artificial intelligence boom re-ignited again this week, with Nvidia hitting new highs and topping a $3 trillion market cap, attention was now on how the firm's shares would react to today's pre-announced stock split.
Nvidia fell back 1% on Thursday, back to being the world's third most valuable company the day after it jumped ahead of Apple (NASDAQ:AAPL) to take second place.
Key diary items that may provide direction to U.S. markets later on Friday:
* US May employment report, April consumer credit; Canada May employment report
* European Central Bank President Christine Lagarde speaks
(By Mike Dolan, editing by Tomasz Janowski mike.dolan@thomsonreuters.com)