Investors raised their bets on the prospect of a U.S. rate cut this month, after payrolls data showed job growth came in roughly in line with expectations in November, while the euro was flat versus the dollar as political turmoil gripped France.
Futures markets put an 89% chance on the Fed cutting rates by 25 basis points at its next meeting on 18 December after the payrolls data, compared to a 68% chance earlier in the session.
Nonfarm payrolls
increased by 227,000 jobs last month after rising an upwardly-revised 36,000 in October, in a month hit by hurricanes and strikes. Economists polled by Reuters had forecast payrolls accelerating by 200,000 jobs.
“These data clear the path for the Federal Reserve to further reduce the policy rate in December–nothing in these jobs data supports a pause in normalisation,” Jamie Cox, managing partner at Harris Financial Group, said.
U.S. stock futures were up after the data, with Wall Street indexes expected to see a 0.1% gain.
The US dollar index was last down 0.1% at 105.58.
Treasuries rallied after the data on Friday. The two-year note was last yielding 4.096%, down 5 basis points on the day, while 10-year benchmark yields were down 2.7 bps at 4.157%.
European stocks were also up on the day 0.4%, while Britain’s FTSE 100 was flat, as investors digested news that insurer Aviva had agreed to buy rival Direct Line for 3.6 billion pounds ($4.6 billion).
The Aviva swoop on Direct Line in Britain was further evidence of a pick-up in dealmaking across markets, said Shaneel Ramjee, senior investment manager at Pictet. “Throughout both Europe and the U.S., these deals are starting to get done, and that just means more activity in the economy,” he said.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan reversed earlier losses to be up 0.2% thanks to a rally in Chinese shares, making up for investor caution around political ructions in South Korea.
Chinese shares had climbed to three-week highs as investors scooped up technology shares ahead of a top-level policy meeting next week that will set the agenda and targets for China’s economy next year.
The risk premium investors demand to hold French debt rather than German Bunds dropped to a two-week low on Friday, after President Emmanuel Macron said he would appoint a new prime minister soon to get a 2025 budget approved by parliament.
The euro had rallied on Thursday, on market relief that France had avoided a more volatile political outcome for now. The euro was last broadly flat on the day and the week at $1.05845.
BITCOIN REVERSAL
Bitcoin, which hit the $100,000 mark for the first time as investors bet on a friendly U.S. regulatory shift, ran into profit-taking. It tumbled as far as $92,092 and was last down 0.3% on the dat at $98,731.
“This spike in volatility over the last 24 hours has the hallmarks of a classic blow-off top,” said Tony Sycamore, analyst at IG.
Oil prices fell as the decision from OPEC+ to delay a planned hike in output to April highlighted concerns about weak demand. Brent and U.S. crude futures both fell around 1% to $67.53 and $71.35 a barrel respectively.
Gold prices inched higher on Friday, up 0.1% to $2,636 per ounce, but were headed for a second straight week of declines. ($1 = 0.7836 pounds)
(Reporting by Iain Withers, additional reporting by Johann Cherian and Stella Qiu in Sydney; Editing by David Evans, and Frances Kerry and Toby Chopra)
