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Wall Street futures edged higher on Friday, as investors digested closely watched US data showing jobs growth was weaker than expected.
Shortly after the figures were released US futures contracts pointed to Wall Street’s benchmark S&P 500 and the Nasdaq opening 0.2 per cent higher, after three successive days of losses.
The US economy added 187,000 jobs in July, less than the 200,000 forecast of economists polled by Reuters. The cooling labour market data added to signs that the Fed’s historic tightening cycle was beginning to feed through to the world’s largest economy.
But the report also showed that average hourly earnings increased 4.4 per cent year on year in July, unchanged from the previous month and slightly above analysts’ expectations.
The US central bank had last raised its benchmark federal funds rate to a target range between 5 per cent and 5.25 per cent, signalling that future tightening will be contingent on data.
“[Wage] growth in the 4 per cent region may not be enough to convince bankers that monetary policy is working, so further interest rate hikes may be around the corner”, said Richard Flynn, managing director at Charles Schwab UK.
Yields on the policy-sensitive two-year US Treasury slipped 0.02 percentage points to 4.88 per cent, while yields on the benchmark 10-year note fell 0.03 percentage points to 4.16 per cent. Bond yields fall as prices rise.
Long-term Treasuries came under pressure earlier in the week, with yields hitting a nine-month high on Thursday, after the Treasury lifted its issuance target for the coming quarter.
“US bonds remained under pressure yesterday due to the toxic combination of resilient US activity indicators, rising supply and the impact of Fitch’s downgrade,” said Francesco Pesole, FX strategist at ING.
“It does appear like a rather unique combination of factors which has generated a bearish pocket, and questions about the sustainability of the sell-off are rather appropriate,” he said.
Investors also reacted to corporate earnings from Amazon, Apple and Airbnb after the close on Thursday.
Amazon gained 8.8 per cent in pre-market trading, but Apple lost 2.8 per cent, as investors grew cautious after the company said its total revenues declined for the third successive quarter. The two companies account for almost 20 per cent of the Nasdaq’s value.
In Europe, the region-wide Stoxx Europe 600 index was down 0.3 per cent, while France’s Cac 40 and Germany’s Dax both declined 0.4 per cent.
In Asia, China’s benchmark CSI 300 gained 0.4 per cent and Hong Kong’s Hang Seng rose 0.6 per cent after the People’s Bank of China pledged to divert financial resources to the country’s struggling private sector. Japan’s Topix rose 0.3 per cent.