MARKET WRAPS

European stocks were steadying after falling at open as

semiconductor stocks slid , following sentiment from the U.S. and Asia.

In Paris, the CAC index bucked the trend as luxury stocks counted a slide for STMicroelectronics , and in London software stocks helped the FTSE index into green territory.

Software and semis have often moved with inverse proportionality this week.

U.S. labor market data at 1230 GMT is in focus Friday.

The economy is broadly expected to have created around 88,000 jobs, with the unemployment rate staying at 4.3%.

Stable labor conditions could indicate inflation risk would drive upcoming Federal Reserve policy decisions , with interest-rate cuts likely postponed.

However, UBS said the range of estimates for the U.S. jobs data was particularly scattered.

In a surprising development, S&P Dow Jones Indices decided against policy changes that would have allowed SpaceX and other gigantic technology companies to see quicker index entry after their IPOs .

The news might reverberate once U.S. markets open.

Stocks to Watch

AstraZeneca has released promising data for pipeline drugs outside its core oncology business that seemed underrated by the market, Bernstein said.

Non-oncology drugs account for nearly two-thirds of Bernstein's estimate for the U.K. pharmaceutical company's sales growth over the next five years, it added.

Market Insight

The U.S. payrolls report has lost some of its aura, partly on question marks as to its accuracy, but also the U.S. economy has become more complex to track, according to ING.

"Even on very little expectation for employment growth, risk assets aren't perturbed at all."

Bond markets would typically be on major alert into payrolls reports, but less so in recent months.

That said, it remains an important barometer of the labor market, and absolutely sets the tone for the months ahead, it added.

U.S. Markets:

The Nasdaq and S&P 500 were falling premarket as the AI Rally halted, and Dow futures were edging up.

Forex:

The dollar fell slightly as investors awaited key nonfarm payrolls and uncertainty over the Iran war remained elevated.

Following months of weak jobs growth, the labor market appeared to be stabilizing and Friday's data could exceed expectations with payrolls rising 100,000 in May, Commerzbank said.

"The key factor for the dollar is the extent to which the figures bolster market expectations of further interest rate hikes."

Despite the yen's renewed weakness near the 160 level Japan's yen-buying operations aren't limitless.

While the government can immediately use cash deposits for intervention, it would also need to sell its holdings of Treasurys to raise dollars in case of large yen-buying, dollar-selling operations.

That could drive up U.S. bond yields, making Washington nervous and potentially straining relations between the two countries.

Bonds:

Yields on eurozone and U.K. government bonds were steady as investors awaited the U.S. jobs data.

Treasury yields were stable to marginally lower.

With the European Central Bank expected to deliver its first insurance rate hike next week, there was a risk of market overshooting in the pricing of more hikes ahead , SocGen said.

The strategists kept a bearish view on Bunds and preferred selling rallies rather than buying selloffs, they say.

"The energy crisis is depressing euro area growth outlook, thereby anchoring medium-term ECB pricing near 2.50% and preserving value in the belly of the euro curve."

SocGen said separately that a reopening of the Hormuz Strait would likely lead to a steepening of sovereign curves, whereas a renewed escalation could trigger more flattening.

"On the margin, we like tactical five- to 10-year steepeners in Bunds."

Alternatively, it preferred positioning in the 10-30-year or five- to -30-year segments.

"They have shown consistent and predictable behaviour in both sell-offs and rallies."

Energy:

Oil prices slipped, but were headed for weekly gains as renewed tensions in the Middle East and uncertainty over U.S.-Iran talks dampened hopes for an imminent, gradual reopening of the Hormuz Strait.

A renewed ceasefire between Israel and Lebanon faced immediate strain, as both sides exchanged fire within hours of the agreement.

"The oil market continues to trade on expectations of an imminent resumption in energy flows from the Persian Gulf," ING said.

"This leaves significant upside risk as inventories fall and we move closer towards the stronger demand period of the third quarter."

Metals:

Gold traded below $4,450 and was on track for a weekly loss as uncertainty surrounding U.S.-Iran peace talks and renewed hostilities in the Middle East weakened sentiment.

Concerns over sustained disruptions to energy shipments through the Hormuz Strait have supported higher oil prices and heightened inflation risks, strengthening prospects of higher-for-longer interest rates or potential hikes that would weigh on non-yielding assets.

"Energy analysts warn that rapid inventory drawdowns from the Strait of Hormuz closure are likely to deliver fuel price shocks, with prices across the energy complex expected to remain higher for longer," Saxo Bank said.

Gold Chart

Although the latest bullish candlestick pattern shows that selling pressure for comex gold futures was taking a minor breather, the overall technical setup remained bearish, based on the daily chart, RHB said.

The nearest support for the commodity was expected at $4,400, while initial resistance was pegged at $4,650.

EMEA HEADLINES

Bodycote Shares Fall After Apollo Pulls Back on Making Firm $2 Billion Takeover Offer

Shares in Bodycote fell on Friday after Apollo Global Management said it doesn't intend to make a firm takeover offer, ending discussions over a 1.52 billion-pound ($2.04 billion) proposal.

In European morning trade, shares fell 9.4% to 746 pence, but are up 6.6% over the year to date.

Evoke Shares Rise After Board Agrees to $326 Million Takeover by Bally's Intralot

Shares in Evoke rose after the gambling company said it had agreed to a 243.1 million-pound ($326.4 million) takeover bid from peer Bally's Intralot.

London-listed shares in the owner of betting brands William Hill and 888 were up 13% at 45 pence in Friday morning trading.

Raspberry Pi Shares Surge on Strong Earnings Outlook

Shares in Raspberry Pi Holdings climbed after the low-cost computer maker said it expects full-year earnings to significantly exceed market expectations, after projecting strong profitability for the first half.

London-listed shares were up 19.5% at 9.85 pounds in European morning trading. Year to date, shares have more than tripled in value.

Real-Time Satellite Intelligence Is Making Ukraine's Drone Strikes Deadlier Than Ever

The small unit of the Ukrainian Armed Forces, stationed about 10 kilometers from the front line in the country's southeast, knew there was something afoot in a building obscured by thick tree cover. The spring foliage hid its outline but not the signals from the electronic devices within.

The team launched a reconnaissance drone, which couldn't see much through the trees. But the soldiers had another card to play: high-definition, near-real-time images taken by commercial satellites, delivered directly to their phones, tablets and laptops.

Lex Greensill Banned From Serving on Corporate Boards

Lex Greensill, the financier whose eponymous lending firm collapsed in 2021, was banned by U.K. regulators from serving on company boards.

Thursday's nine-year ban by the Insolvency Service, a government agency that investigates failed companies, is the first formal punishment of the Australian financier over the bankruptcy of Greensill Capital. The firm's unraveling ricocheted across the financial world, especially on now-defunct Swiss bank Credit Suisse, which had sold loans by the firm to its clients.

Commodities Trader Trafigura Warns of Tipping Point in Energy Markets

Trafigura said the Middle East conflict has thrown global commodity markets into turmoil, warning that while energy prices remain relatively contained for now, markets are at an "inflection point" that could see prices move higher as supply tightens further.

The Singapore-headquartered commodities trader said a key reason for the relatively muted oil price response to curtailed production and halt to shipping volumes through the Strait of Hormuz has been the elevated global inventories that markets entered the year with. This created a buffer, while significant reductions in demand across Asia, Australia and Africa have helped ease supply in the west.

GLOBAL NEWS

Fitch Cuts Global Growth Outlook in Latest Downgrade to Capture Mideast Impact

The oil shock triggered by the U.S.-Iran conflict has damaged the global economy's prospects, Fitch Ratings warned, as it cut its growth forecasts and raised its outlook for crude prices for the year.

The ratings firm now expects the world economy to grow 2.4% this year, down 0.2 percentage points from its previous projection, citing the inflationary impact of higher energy costs and ongoing supply disruptions.

Japan Prime Minister Says Will Defend Yen by Strengthening Economy

TOKYO-Japan aims to defend the yen's credibility by strengthening its economy, Prime Minister Sanae Takaichi said, as the currency faces renewed selling pressure amid continued Middle East tensions.

"The economic and fiscal management I am pursuing is not intended to steer foreign-exchange rates," Takaichi told parliament on Friday.

The Anything-Goes Era in Private-Credit Lending Is Coming to an End

The era of anything goes in private-credit underwriting is coming to an end.

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06-05-26 0520ET