World stocks trade cautiously ahead of US jobs data

Global markets traded cautiously on Friday as uncertainty ahead of US employment figures and tensions in Ukraine pushed the yield on 10-year German Bunds to their lowest in a year.

The move into the relative safety of government bonds, also including higher-yielding peripheral euro zone paper that pushed returns on Spanish 10-year debt to a multi-year low, came despite upbeat corporate merger and acquisition activity and earnings.

The big data focus is the US April nonfarm payrolls report. Economists predict jobs growth of 210,000 and a fall in the unemployment rate to 6.6%.

But first quarter US growth estimates are being cut following weak construction data on Thursday to the point that the world's largest economy might actually have contracted.

That, and an escalation in violence in eastern Ukraine between government forces and pro-Russian separatists, weighed on investor sentiment.

European stocks failed to get a boost from US drugmaker Pfizer raising its offer for Britain's AstraZeneca or a forecast-busting profit from Royal Bank of Scotland that lifted shares in the 81% state-controlled bank by 11%.

"People are a bit nervous about payrolls. Last month there was so much hype about it and it came out below expectations. They don't want to get caught out twice, so they are hedging their positions," said Michael Hewson, senior markets strategist at CMC Markets in London.

Hewson also noted that many European and US indices are at or close to record highs so investors are reluctant to chase them higher, especially ahead of a long holiday weekend in Britain.

At 0800 GMT, the FTSE Eurofirst 300 index of leading European shares was down 0.1% at 1353 points and Germany's DAX was down 0.2% at 9585 points. Britain's FTSE 100 index was flat at 6807 points and France's CAC 40 down a third of one% at 4471.

In Asia, the MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.4%. China's markets were closed on Friday.

US stock futures pointed to a flat open on Wall Street.

Two corporate stories grabbed the headlines in Europe. Pfizer raised its bid for AstraZeneca to 50 pounds a share, valuing the UK drugmaker at 63 billion pounds ($106 billion), and RBS posted a 1.6 billion pounds profit in the first quarter.

CALMER CURRENCIES

Germany's 10-year government bond yield slipped to 1.45% and the 30-year US bond yield was 3.43%. Late on Thursday it fell as low as 3.4%.

Spain's 10-year yields fell as low as 3%, their lowest since September 2005 and close to the lowest ever.

Currency markets were calmer, with the dollar well supported ahead of the US payrolls report but major currency pairs trading in tight ranges.

The euro slipped 0.1% to $1.3853, and the dollar rose 0.1% against the yen to 102.45 yen.

In the commodities markets, oil remained top-heavy after slipping Thursday on disappointing Chinese manufacturing activity and data showing US crude stocks rose last week to their highest level since 1982.

US crude futures brushed that aside, however, and rose 0.4% to $99.487 a barrel.

London copper was on track to log its biggest weekly loss in seven weeks, weighed by the Fed's decision this week to continue tapering its stimulus, which had provided the commodity markets with liquidity.

But in tandem with oil, three-month copper on the London Metal Exchange recovered ground in early European trading to rise 0.2% to $6,657.00 a tonne. Copper prices have dropped about 1.6% this week.

EDITORIAL OF THE DAY

  • India’s political space acts as a safety valve for maverick politicians and frustrated electorate

    While it is easy to be cynical about Indian democracy and its ways, the fact is that the vast political space that the system provides for in this cou

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Taslima Nasreen

Bangladesh no country for atheists

It’s a matter of pride to be a freethinker, atheist ...

Purnendu Ghosh

Silence makes you aware of yourself

Often, we don’t feel the necessity of making contact with ...

Shona Adhikari

Artistic focus on women's empowerment

The focus on the girl child remains an important one ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture