A look at the day ahead from Karin Strohecker.
Today was going to be all about U.S. non-farm payroll numbers – the gauge that might help the Federal Reserve Jerome Powell determine the timing of tapering.
That was until Japanese Prime Minister Yoshihide Suga announced he would step down after failing to control the COVID-19 outbreak, setting the stage for a new premier.
And then there’s China data, showing the services sector slumping into sharp contraction in August as restrictions to curb the Delta variant threatened to derail the recovery in the world’s second-biggest economy.
However, change can be a good thing and bad data can spur hopes of more stimulus.
Japanese stocks soared 1.5% to a three-decade peak, as Suga’s departure reduces risks of a big loss for his party at elections later this month.
Equities in Europe and the U.S. look on track to end the week on a high, though Chinese shares slipped almost 1%.
All that optimism has knocked the dollar to one-month lows, and kept a lid on global yields while commodities continued their rebound.
But back to payrolls: the United States is expected to have added 728,000 jobs in August, after weekly data on Thursday showed layoffs at their lowest level in almost a quarter of a century.
Nearly 1.9 million jobs were created in June and July, and economists gradually trimmed their forecasts for August in recent days. Elsewhere though, the day looks thin on data with final PMIs and retail sales due for the euro zone.
On the corporate front, UK homebuilder Berkeley is the latest to flag construction cost inflation due to the usual labour and supply chain bottlenecks
Key developments that should provide more direction to markets on Friday:
Struggling Japan PM Suga steps down
China’s August services activity slumps into contraction
Emerging markets-focused investment firm Ashmore says pre-tax profit rose 28% in H1 ; French investment firm Antin plans IPO
Composite final PMIs
Euro zone retail sales
U.S. non-farm payrolls
Moody’s reviews Spain’s credit rating
Graphic: China service sector PMIs: https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwwznkpo/China%20service%20sector.PNG
(Reporting by Karin Strohecker)