Stocks gain ahead of closely watched US jobs report

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European stocks and Wall Street futures rose on Friday ahead of the release of a closely watched US jobs report that will heavily influence whether the Federal Reserve raises rates or leaves them unchanged at its November meeting.

Europe’s Stoxx 600 index and Germany’s Dax added 0.2 per cent and 0.1 per cent respectively in early trading. The moves came a day after eurozone core inflation — which excludes volatile energy and food prices and is closely watched by the European Central Bank — fell to 5.3 per cent in August from 5.5 per cent in July.

London’s FTSE 100 rose 0.3 per cent, led by energy and basic material groups including BP, Shell and Glencore. 

In the US, S&P 500 futures rose 0.1 per cent and Nasdaq 100 futures added 0.2 per cent ahead of the publication of August’s US employment figures, which are expected to show non-farm payrolls increased by roughly 170,000 last month. That would mark the slowest rate of job creation since January 2021.

If the number comes in lower there is a “very realistic case to be made that the Fed is done hiking, [though] that fact shouldn’t cause investors to lose their minds and buy everything in sight”, said Mike Zigmont, head of trading at Harvest Volatility Management. 

“If the data comes in hot, we’re going to continue to be in this will-they or won’t-they world for a while”, he added.

The state of the US labour market has become a concern for investors and economists in recent months, as the world’s biggest economy continued to add jobs and report higher wages despite the Fed’s aggressive monetary tightening campaign.

However, figures out this week suggest the jobs market may be beginning to cool: job openings in July fell to the lowest level in more than two years.

“We haven’t had any numbers lately that’d tell you the Fed’s going to hike in September, and the chances of a hike later this year are fading”, said Steven Blitz, chief US economist at TS Lombard. 

In Asia, meanwhile, China’s CSI 300 gained 0.7 per cent after an unexpected increase in Chinese manufacturing activity last month. 

The Caixin manufacturing purchasing managers’ index came in at 51 for August, indicating expansion and ahead of forecasts by analysts polled by Reuters, who expected a reading of 49.3.

In commodity markets, Brent crude, the international benchmark, added 0.4 per cent to trade at $87.19 a barrel, while US marker West Texas Intermediate rose by the same margin to $84.02 after Russia signalled support for further supply cuts.