Here are the top five things you need to know in financial markets on Friday, May 6:
1. Eyes on April’s employment report, downside risk
Investors awaited the publication on Friday at 12:30GMT, or 8:30AM ET, of the monthly employment report and particularly on the expected creation of 202,000 nonfarm payrolls (NFP), while the unemployment rate was forecast to remain at 5.0%.
Experts pointed to the risk of a miss to the downside after weekly jobless claims posted their largest increase in more than a year on Thursday, while Challenger job cuts increased in April with 2016 planned layoffs reaching a seven-year high and Wednesday’s ADP report showed the lowest employment creation in three years.
2. Global stocks mostly lower as traders brace for NFP
Global equity markets retreated ahead of the U.S. data with Asian stocks headed for their biggest weekly loss since February.
European stocks added to losses on Friday, heading for their worst week in 13, as investors remained cautious ahead of the U.S. employment report and after another batch of mixed earnings reports.
U.S. futures also tallied slight losses while the clock ticked down to publication time. Specifically, at 10:00AM GMT, or 6:00AM ET, the blue-chip Dow futures dropped 0.15%, S&P 500 futures traded down 0.16% and the Nasdaq 100 futures gave up 0.18%.
3. Fed officials keep door open to June rate hike
Even though markets have clearly reduced bets on the possibility of the Federal Reserve (Fed) tightening policy at the next meeting in June, with federal fund futures discounting the probability at just 10%, compared to the 20% registered a month ago, four members of the U.S. central bank suggested on Thursday that a move was possible.
Thought federal fund futures expect only one rate hike in December, San Francisco Fed president John Williams stated that two or three would still be reasonable.
Atlanta Fed chief Dennis Lockhart said he was still undecided on the move in June and that his final decision would be data dependent.
The head of the St. Louis Fed, James Bullard, suggested that global headwinds may have dissipated, clearing the way for policy tightening.
Dallas Fed president Robert Kaplan focused on the fact that it was difficult to know how high rates can rise, implying that he is leaning towards a tightening bias.
4. Oil slips heading for weekly slump
Oil traded down on Friday with West Texas Intermediate headed for a weekly loss of 4.2% and the barrel of Brent facing a 7% slump for the last five days.
However, the weekly drop would arrive after black gold has advanced in 11 of the last 12 weeks.
5. IMF warns on euro zone stagnation amid global growth worries
In a week that saw dismal manufacturing activity in China in a staunch reminder of the fragile state of global growth, the International Monetary Fund (IMF) sent yet another warning on Friday over the worrisome state of Europe, indicating that downside risks have increased and that the possibility of a euro zone stagnation was the largest threat.
The warning arrived even as tensions resurged in Greece with the beginning of a 48-hour nationwide strike to protest tax and pension reforms being considered so it can qualify for its bailout review ahead of a meeting of euro zone finance ministers to discuss the issue on Monday.
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