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European stocks edged higher on Friday as a sell-off in bond markets abated and investors welcomed forecast-beating results from Amazon before turning attention to a US jobs report for clues on how the world’s largest economy is holding up under rising borrowing costs.
Europe’s region-wide Stoxx 600 Europe index was up 0.1 per cent after three successive days of declines, while France’s Cac 40 added 0.5 per cent and Germany’s Dax was flat.
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.
In the US, futures contracts pointed to the S&P 500 opening 0.3 per cent higher later in the day, and contracts tracking the tech-focused Nasdaq 100 were up 0.5 per cent.
Amazon gained 8.9 per cent in pre-market trading, but Apple lost 2 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.
“Even if the shareholders aren’t pleased with the results, the broader market could experience a sentiment boost,” said Mike Zigmont, head of research and trading at Harvest Volatility.
Corporate results steadied global stock markets after a sharp three-day sell-off triggered by hotter than expected US economic data, and further exacerbated by the rise in US government debt yields 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.
The yield on the benchmark 10-year Treasury was flat at 4.19 per cent on Friday, having slipped from the nine-month high it hit a day earlier. Bond yields fall as prices rise.
Investors turned their attention to the key US non-farm payrolls data coming out later on Thursday, which is expected to show that the economy added 200,000 jobs in July, down from 209,000 in the previous month.
Signs of a cooling labour market come more than a year after the US Federal Reserve first began to lift interest rates in efforts to tackle raging inflation, and could bolster investors’ beliefs that the country’s historic tightening cycle is approaching its end.
