European Stocks Eye Steady Open Ahead of Jobs Data

European stock futures were steady following gains in Asia ahead of key US jobs data, after Jerome Powell reaffirmed that the Federal Reserve will likely lower rates this year, Bloomberg reported.

The Euro Stoxx 50 contract was flat, while its US peers edged higher. Equity benchmarks rose from Australia to Japan, with the Topix index up as much as 1.7% to head for its best day in about two weeks. Markets in Hong Kong, mainland China and Taiwan are closed for a holiday.

“We remain constructive on Asian markets,” said Rajat Agarwal, Asia equity strategist at Societe Generale. “There is very little doubt that the Fed will cut rates. The growth downtrend is coming to an end in Asia, while earnings momentum is picking up.”

The dollar’s recent retreat has also eased pressure on Asian equities, which have been searching for a clear direction after delivering their best first quarter since 2019. A gauge for the greenback steadied after it saw its biggest drop in nearly four weeks on Wednesday as price pressures in the US services industry eased.

Fed Affirmation

Fed Chair Powell reiterated that the central bank will take a wait-and-see approach before reducing borrowing costs. However, his views that recent inflation figures did not “materially change” the overall picture offered support for risk assets.

In recent days, traders had scaled back their rate-cut expectations amid signs of economic resilience and a more cautious tone from a drumbeat of Fed officials. That has led to skepticism on whether Powell and his colleagues would be able to deliver on the central bank’s projection of three rate reductions this year.

Treasuries were largely steady in thin Asian trading, with the yield curve bear-steepening. In Japan, the breakeven inflation rate for the 10-year CPI-linked bonds rose one basis point to a record high.

“Powell says recent data has not materially changed the picture,” said Krishna Guha at Evercore. “We read this as confirming that the spasm of concern in markets that the economy might be too strong for the Fed to cut in June was overdone — and the base case remains June and three cuts this year.”

Elsewhere, gold was steady after setting a fresh record high Wednesday, when it topped $2,300 per ounce in a rally helped along by Powell’s support for potential rate cuts this year. Oil looked poised for its fifth straight session of gains, while copper jumped to the highest since January 2023 due to mounting supply risks and fresh signs of stronger demand.

Investors were also assessing the impact of the strongest earthquake to hit Taiwan in a quarter of a century. The shock killed at least nine people and has disrupted semiconductor production. Taiwan Semiconductor Manufacturing Co., a major supplier of chips to Apple Inc. and Nvidia Corp, moved some staff out of its production centers but said there was “no damage to critical tools”.

Shares in Samsung Electronics and SK Hynix rose on expectations for higher chip prices due to production disruptions in Taiwan caused by the island’s latest earthquake.

The yen was flat against the dollar. Former Bank of Japan board member Makoto Sakurai said Wednesday that the central bank is likely to wait until around October before mulling another interest rate hike.