Stocks skip higher ahead of U.S. jobs data

LONDON (Reuters) – World stocks rose for a fourth straight day on Thursday as encouraging coronavirus vaccine trials kept investors’ spirits up ahead of what was expected to be a record rebound in U.S. jobs figures.

Economists polled by Reuters expect a bumper 3 million U.S. jobs to have been added in June on top of the 2.5 million created in May, and some generally reassuring data from both Asia and Europe this week.

Despite the ongoing rise in global virus cases, Asian equity markets saw their biggest daily climb in more than two weeks overnight, aided by news that a vaccine being trialled by Pfizer and Germany’s BioNTech had been well tolerated in early-stage human tests.

Europe had a strong morning too, with banking, travel and carmaker stocks driving 1-2% gains for its main bourses, and the euro helped back up towards $1.13 by a third day of dollar falls. [/FRX]

“The big thing today is the U.S. non-farm payrolls… but by and large risk has been bid and the dollar has been weakening,” said RBC FX strategist Alvin Tan.

“What has really helped sentiment (in the last 24 hours) has been some of the preliminary results on a vaccine”.

A vaccine for COVID-19, which has now killed more than half a million people globally and sent the world economy into deep recession, has been long anticipated.

In a sign the positive sentiment will extend, E-minis for S&P500 rose 0.8%, while bond markets were also favouring risk over safety.

Treasuries hovered at 0.68%, the 10-year Germany Bund yield broke above -0.4% for the first time in a week after improved euro zone manufacturing data the previous day, while Portugal’s borrowing costs hit a 3-month low.

All major Asian indexes were upbeat. Japan’s Nikkei rose only fractionally, but China’s blue-chip index added 2% and Hong Kong’s Hang Seng jumped 2.8% as investors brushed off concerns over sweeping new security laws introduced by Beijing.

(Graphic: Financial markets battle rise of COVID-19, here)

JOBS VS THE VIRUS

Attention was turning to the looming U.S. employment figures that will feed debate on whether the world’s largest economy can sustain its fragile recovery in the face of rising COVID-19 cases in some key parts of the country.

Several states, along with some other parts of the world, are reversing or pausing reopenings to tackle a recent surge in infections, leaving analysts worried about another selloff in financial markets if the damage mounts.

“A better-than-expected outcome could go some way to settling the near-term debate that the U.S. labor market will heal relatively quickly and justify new highs in U.S. equities,” said Stephen Innes, strategist at AxiCorp.

In commodities, the most-traded August copper contract on the Shanghai Futures Exchange touched 49,570 yuan ($7,016.28) a tonne, its highest this year.

Top copper consumer China posted better-than-expected manufacturing data in June, while U.S. manufacturing activity rebounded and the factory sector in Germany contracted at a slower pace.

In Chile, where the number of COVID-19 cases have been climbing, miner BHP said it would begin to slow production at its small Cerro Colorado copper mine.

Oil prices climbed and gold eased as encouraging macro data prompted investors to take on more risk.

Brent crude climbed 30 cents to $42.37 a barrel. U.S. crude rose 35 cents to $40.17 a barrel. U.S. gold futures were 0.21% lower, at $1,776.20.

The dollar was largely unchanged against the Japanese yen at 107.45. The euro was higher at $1.1293, sterling rose to $1.2520 and the risk-sensitive Australian and New Zealand dollars were 0.3% and 0.5% stronger respectively.

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