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European stocks rose, following Asia higher, after the latest US data reinforced optimism in a global pivot towards central-bank easing next year as inflation fears evaporate.
The Stoxx 600 index added 0.2%, climbing for a second day as US equity futures advanced. MSCI’s Asia Pacific Index gained the most in three weeks. US 10-year Treasuries were steady after a rally in the previous session took the yield below 4.2%. The dollar dipped against most of its Group-of-10 peers. The weaker-than-forecast jobs-market data reinforced speculation the Federal Reserve will cut interest rates next year to avert a recession. That poured fuel on the gains for global bonds, but also triggered warnings that the market’s hopes for easing have gone too far.
“Additional signs of a cooling labor market solidify the notion that the Fed’s tightening trajectory has been relegated to the history books,” said Hebe Chen, an analyst at IG Markets Ltd in Melbourne. “Now, all eyes are turning to next week’s FOMC meeting, making it a must-watch but done-deal event.”
The moves in Treasuries came after one of the European Central Bank’s (ECB) most-hawkish officials said inflation is showing a “remarkable” slowdown. That led investors to bet that Europe will lead the world’s largest central banks on interest-rate cuts. Bank of Japan’s Deputy Governor Ryozo Himino signalled that the central bank is inching closer to putting an end to the world’s last negative interest rate regime. Oil steadied after a four-day drop as a flood of US exports, coupled with doubts over whether Opec+ will be able to deliver on its planned production cuts, raised concerns of oversupply. Gold edged higher.