Stocks, dollar ease before US payrolls

Global stocks, oil and the dollar eased on Friday as investors took a cautious stance before US payrolls data, which may cement the case for a Federal Reserve rate increase, and Italy’s referendum on constitutional reform yesterday.

Strong economic data from the United States, including upbeat manufacturing activity and construction spending, have bolstered the view that the Fed will tighten monetary policy faster than expected to keep inflationary pressures in check. US employers probably hired more people in November amid growing confidence in the economy, making it almost certain that the Federal Reserve will raise interest rates later this month.

Stock futures on Wall Street were down 0.3 percent. The S&P 500 is up more than 2 percent since the November presidential election on hopes that Presidentelect Donald Trump’s policies will stoke growth. Yields for 10-year US Treasuries eased after reaching an 18-month high of 2.492 percent overnight. The dollar was on course for its first weekly decline in four weeks against the euro and a basket of currencies as investors trimmed bets following recent gains.

“I don’t think we need to overcomplicate things today. You have the Friday factor, there is always a degree of reserve before payrolls. It does also feel as if liquidity is already falling ahead of the end of the year. Some people may be sitting back and waiting for January,” said Neil Mellor, a strategist at BNY Mellon in London.

In Europe, the benchmark STOXX 600 fell more than 1 percent dragged lower by industrial and financial stocks. European stocks, down 12 percent this year, are the worst performers among major equity indexes globally and have underperformed peers in the US by about nearly 15 percentage points this year. — Reuters