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European stocks climb; German factory orders rise ahead of U.S. jobs report

Published 06/10/2023, 09:18
Updated 06/10/2023, 09:18
© Reuters.

Investing.com - European stock markets edged higher Friday in cautious trading as investors awaited the release of the monthly U.S. jobs report that could set the tone for the Federal Reserve’s next interest rate move.

At 04:05 ET (08:05 GMT), the DAX index in Germany traded 0.7% higher, the CAC 40 in France climbed 0.5% and FTSE 100 in the U.K. rose 0.3%.

German factory orders rise

Sentiment has been helped Friday by the release of data showing German factory orders rose 3.9% on the month in August, a sharp improvement from the revised 11.3% drop the prior month, helped by a strong increase in computing, electronic and optical products.

Additionally, U.K. house prices fell 0.4% in September, according to data from Halifax, an improvement from the drop of 1.8% the prior month.

 

Goldman Sachs (NYSE:GS) expects economic growth in the euro area to recover to 1.25%-1.5% in 2024, more than double their forecast of about 0.5% for this year's growth.

However, Goldman sees fiscal policy risks.

"Fiscal policy poses the main risk to Europe's growth catch-up in 2024... rising long-term interest rates and slowing nominal growth point to risks that a sharper fiscal adjustment might be required, especially in Italy," said analysts at Goldman Sachs, in a note.

Elsewhere, European Union leaders are set to meet in a summit in Spain, starting later Friday, and are set to discuss how the bloc can strengthen its competitiveness, be at the forefront of new green and digital technologies and reduce its reliance on third countries, notably China.

The EU leaders could also discuss a potential agreement with the U.S. on steel and aluminium trade that would avert the re-imposition of Trump-era tariffs, according to Bloomberg News.

U.S. jobs report in focus

However, the main focus of attention this session will be the release of the U.S. jobs report for September, as this is likely to be a key factor in the Federal Reserve's next interest rate decision. 

It's been a mixed week for U.S. labor market data, starting out with higher than expected job openings as of the end of August, then lower than expected private payroll numbers from ADP. Thursday's unemployment claims ticked up from the prior week but were slightly below expectations.

The U.S. central bank held the rate steady when they met in September, but a hawkish assessment of conditions pointed to another interest rate increase this year, resulting in U.S. Treasury yields soaring to 16-year highs.

Suitors looking at Aviva - Times

In corporate news, Aviva (LON:AV) stock rose 7.9% after the Times newspaper reported that at least two potential suitors are looking at the insurance company.

Metro Bank (LON:MTRO) stock rose 8% after Sky News reported that the lender had sounded out Lloyds Banking Group (LON:LLOY) and NatWest (LON:NWG) about buying some of its mortgage book in a move that would reduce its capital requirements.

Crude set for sharp weekly demand

Oil prices edged higher Friday, but were on course for their steepest weekly decline for months on concerns of a global economic slowdown and the associated hit to fuel demand.

Official U.S. data this week showed a sharp build in gasoline stocks, indicating a decline in gasoline demand in the largest consumer in the world, and attention now turns to the release of the U.S. monthly jobs report later in the session for signs of how strong the economy is.

By 04:05 ET, the U.S. crude futures traded 0.4% higher at $82.66 a barrel, while the Brent contract traded 0.3% higher at $84.33. 

The U.S. crude benchmark was down 9% this week, heading for its sharpest weekly loss since April, while the Brent contract was down more than 11%, on course to its sharpest weekly loss since March.

Additionally, gold futures rose 0.2% to $1,834.95/oz, while EUR/USD traded 0.1% higher at 1.0551.

 

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