EMEA Morning Briefing : Investors Look Ahead to U.S. Jobs Data

MARKET WRAPS

Watch For:

Eurozone GDP, employment; Germany industrial production index; no major trading updates expected

Opening Call:

European stock futures were lower, after Asia stocks traded mixed. The dollar weakened, U.S. Treasurys edged lower. Gold slightly rose and oil fell.

Equities:

European futures fell as investors digested a week of political events that drove markets. Investors are also looking ahead to the U.S. jobs report later in the day as well as the European Central Bank's rate-decision meeting next week.

"The markets are continuing on this fear-of-missing-out momentum trade," said Megan Horneman, chief investment officer at Verdence Capital Advisors. "We're cautiously optimistic about equities over the next 12 months but, at the levels they are at right now, I think they're borrowing from some of 2025's return," she said.

Separately, France's political crisis comes at a difficult time with Europe falling short of the strategic investments needed to remain competitive, a slowing Chinese economy, and the uncertainties of the next U.S. administration, Lombard Odier's CIO office said in commentary.

"The French stock market has nevertheless reflected the nation's political uncertainties this year," analysts said, adding that the benchmark CAC40 index has priced in political risk in 2024, despite its key companies depending more on global than domestic markets.

"This creates some potential for the index to catch up in 2025," Lombard Odier said.

Forex:

The euro weakened against the greenback, as markets are sufficiently bearish on the euro area outlook ahead of next week's ECB rate decision, Morgan Stanley said.

"Any sign of unchanged messaging could be treated as a hawkish surprise, " MS noted.

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"Diverging rate-cutting trajectories and tariff expectations are boosting the U.S. dollar," said Fitch Ratings' Chief Economist Brian Coulton.

Tariffs from the will boost U.S. inflation, which is still proving sticky, Coulton noted, adding that the ratings agency raised its CPI forecasts for the U.S. as "a crackdown on immigration could add to inflation by reducing labour supply growth."

Bonds:

The cost of insuring French government bonds against default stayed steady, just shy of this week's multiyear high, after French Prime Minister Michel Barnier was forced to resign following a no-confidence vote. This exacerbates concerns over France's budget and its high deficit.

"France's political and economic backdrop remains shrouded in uncertainty," said Kate Marshall, senior investment analyst at Hargreaves Lansdown.

"This prolongs any hope of tackling the country's ballooning deficit," she added.

Energy:

Oil edged lower as trade remained in a tight range despite OPEC's decision to keep voluntary production cuts, marking the third time the group has delayed hiking output, ANZ said.

OPEC's plan also points toward a slower increase in production than before, ANZ added.

Metals:

Gold edged higher ahead of the U.S. nonfarm payrolls report due later in the day.

The data's outcome could play a pivotal role in defining the Federal Reserve's future policy stance and may lead to volatility in the gold market, said George Pavel, general manager at Naga.com Middle East.

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Copper prices were steady, as base metals traded in a tight range despite the weakness of the U.S. dollar, indicating a lack of strong risk-on appetite, said Daria Efanova, head of research at Sucden Financial.

Concerns around weak demand in China continue to loom despite prospects of tightening refined copper supply next year, she noted.

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Iron ore futures fell amid lingering worries over China's property market have raised questions about the sustainability of the ore's recent price rebound, said ANZ.

Despite several stimulatory measures, Chinese property developer Country Garden witnessed a fall in its contracted sales in November, the bank noted.

TODAY'S TOP HEADLINES

Why a 'robust' jobs report for November probably wouldn't derail Fed rate cut

A "decently robust" U.S. jobs report on Friday probably wouldn't derail the Federal Reserve from delivering an interest-rate cut this month, as the Fed's policy rate remains restrictive, according to Russ Brownback, head of global macro positioning for fixed income at BlackRock.

"The broad consensus is that that data is going to be strong on Friday, with a real bounce back," said Brownback by phone. "The data for October was brought down by the terrible weather and the strikes," he said, referring to employment disruptions from hurricanes and striking workers.

Trump Plans to Appoint Musk Confidant David Sacks as AI, Crypto Czar

President-elect Donald Trump named a Silicon Valley investor close to Elon Musk as the White House's artificial intelligence and cryptocurrency policy chief, signaling the growing influence of tech leaders and loyalists in the new administration.

David Sacks, a longtime venture capitalist who worked with Musk at PayPal more than two decades ago, will serve as the "White House A.I. & Crypto Czar," Trump said on his social-media platform Truth Social.

Is This Wildly Overvalued Stock Market Doomed? Yes, but Maybe Not Yet

Here are two particularly scary forecasts for investors: Goldman Sachs thinks the S&P 500 will make just 3% a year over the next 10 years, as Big Tech dominance eventually falters. Bank of America expects 0%-1% a year for a decade, a catastrophic investment prospect.

Their conclusion: Buy stocks anyway, because the next year looks great.

Volkswagen Faces More Warning Strikes Monday

The union representing Volkswagen employees said there would be more warning strikes at nine German sites on Monday as the dispute with the carmaker over how to cut costs persists.

Volkswagen has been at loggerheads with the IG Metall union for weeks as the company, one of Germany's biggest employers, seeks to implement domestic cost cuts amid sluggish electric-vehicle demand and competition from Chinese rivals.

French Government's Collapse Lands Macron in a Minefield

PARIS-The collapse of France's government is amplifying questions about whether the country's divisive and at times impetuous leader, President Emmanuel Macron, is suited to resolve the country's political crisis.

The critique from lawmakers-many of whom voted to oust Michel Barnier as prime minister in a no-confidence vote on Wednesday-is rooted in the idea that the current crisis is largely of Macron's own making. It was Macron who opportunistically called snap parliamentary elections last summer, only to see France saddled with a hung National Assembly that is now struggling to pass a 2025 budget and stave off a panic among investors.

HPE sees more than 30% growth in server sales as AI boom rolls on

As sales of artificial-intelligence servers boom, Hewlett Packard Enterprise turned in a new quarterly revenue record, which was better than what analysts were expecting.

HPE HPE, along with Dell Technologies Inc. DELL and Super Micro Computer Inc. SMCI, sells servers, including those used for AI applications. But HPE's stock has been the most understated of the three this year, with its 28% gain. Shares rose 0.4% in the extended session after Thursday afternoon's results.

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Expected Major Events for Friday

00:01/UK: CBI Economic Forecast

05:30/NED: Oct Consumer Spending

07:00/GER: Oct Industrial Production Index

07:00/NOR: Oct Industrial Production Index

07:00/ROM: 3Q GDP

07:00/UK: Nov Halifax House Price Index

07:00/DEN: Oct Industrial production & new orders

07:30/HUN: Oct Preliminary Industrial Production

07:45/FRA: Oct Foreign trade

07:45/FRA: Oct Balance of payments

08:00/CZE: Oct Retail trade

08:00/SWI: Nov SNB foreign currency reserves

08:00/AUT: Sep Foreign Trade

09:00/ITA: Oct Retail Sales

09:00/BUL: 3Q GDP - preliminary data

09:30/UK: 3Q Bank of England external business statistics

10:00/GRE: 3Q Provisional GDP

10:00/EU: 3Q GDP and Main Aggregates Estimate

10:00/EU: 3Q Employment

10:00/LUX: 3Q GDP

10:00/GRE: Oct External Trade (provisional data)

11:00/IRL: Nov Irish Live Register latest monthly figures

All times in GMT. Powered by Onclusive and Dow Jones.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

12-06-24 0016ET