Germany labor cost index; UK Bank of England/Ipsos Inflation Attitudes Survey; trading updates from Anglo American, Associated British Foods
Shares may post mild gains at the open after U.S. indexes ticked higher overnight, as traders turn to upcoming inflation data in the U.S. In Asia, stock benchmarks, oil and gold advanced; Treasury yields were mixed, while the greenback weakened.
Stock futures point to slight gains in Europe at Friday's open after the S&P 500 snapped a five-session losing streak overnight.
Investors were encouraged by weekly U.S. jobs data Thursday showing the number of continuing jobless-benefit claims rose to the highest level since February, which was interpreted as reducing some of the pressure on the Federal Reserve to continue to raise interest rates, said Richard Farr, chief market strategist at Merion Capital Group.
"The small increase in unemployment claims may be viewed by some as a reason to reduce recession odds," Farr said.
Some economists suggest that it is too early to interpret higher jobless claims as a signal of a loosening labor market because seasonal issues could make it difficult to assess.
"Weak hiring during the holidays and weak incentives for workers to begin a new job around the holidays help push continuing claims higher from Thanksgiving through to New Year's," wrote Isfar Munir, U.S. economist at Citi, in a Thursday note. "While continuing claims have been rising for a few weeks now, the usual seasonal pattern prevent us from drawing any clear conclusions from the jobless claims data."
Even with Thursday's gains, investors are focused on coming inflation reports-producer prices on Friday and consumer prices on Tuesday-and next week's Fed meeting, said Louis Navellier, founder of Navellier & Associates. The expectation is for tame inflation reports and a dovish Fed statement. "We're just treading water, waiting to get all the good news," he said.
Read: Financial markets are flashing a warning that a recession is imminent: here's what it means for stocks
The dollar weakened early Friday. "Unemployment claims were up, and in the continuing saga of bad news being good news, equities reacted positively," said Daniel Berkowitz, senior investment officer for Prudent Management Associates.
He added that "a gradually cooling jobs market offers insight into more far-reaching impacts on the economy."
If upcoming consumer-price index and producer-price index readings show moderating inflation, "there's a case to be made that inflation truly has peaked," he said.
The dollar and Treasury yields have risen this year as the Fed raised rates to fight inflation, and have often fallen this year when economic data suggested cooling inflation, which in turn could lead the Fed to slow the pace of rate increases.
Treasury yields were mixed in Asia after rising Thursday as investors turned their attention to producer-price index data.
Some analysts attributed Thursday's rise in yields to profit-taking by bondholders ahead of the November PPI report.
With a relative dearth of major U.S. macroeconomic information on Thursday, investors continued to contemplate the prospect of a still too-strong U.S. economy and whether a soft landing is "anywhere near achievable," said SPI Asset Management.
Ahead of next week's FOMC meeting, "the market is increasingly sensitive to every data point" and "tomorrow's PPI report is a potential game changer," said Stifel, Nicolaus & Co. Chief Economist Lindsey Piegza. The report "could undermine the Fed's plans for a pivot to a less aggressive policy" if producer price pressures fail to retreat.
Crude oil prices rebounded in Asia amid a mixed outlook after declining overnight.
While optimism for China's eventual reopening is helping to support prices, oil is unlikely to move sharply higher due to looming fears of slowing global economic growth, said IG.
Reactions to the Russian oil price cap and the closure of the Keystone oil have been largely muted or short-lived, IG added.
Gold prices rose early Friday ahead of the release of key U.S. inflation data.
The price of the precious metal is likely to remain around the $1,800/oz level ahead of the release of inflation expectations by the University of Michigan, said Oanda.
Investors are also likely watching for any further comment from the FOMC on when interest rates are expected to peak, Oanda added.
Copper prices advanced, sustaining a strong rally amid broad gains in base metals over recent weeks on the back of China reopening hopes and optimism for economic recovery.
ANZ pointed to a host of positive signals for copper demand, including the continued relaxation of pandemic curbs by Beijing and signs of stabilization in the country's real estate sector, which is a key source of copper demand.
ANZ said investor sentiment will remain buoyed by better-than-expected November import data, which could underpin more upbeat expectations for copper demand from the world's second-largest economy.
Meanwhile, Morgan Stanley highlighted aluminum, iron ore and metallurgical coal as their top commodities picks in the China reopening trade, and said it remains positive on gold, too.
Morgan Stanley cited tight supply, hydropower shortage and a demand pickup in China as reasons to bet on aluminum. For iron ore, the bank expects seasonally tight 1H supply and a backlog of infrastructure projects. Metallurgical coal is likely to get support from strong thermal-coal prices, as well as modestly improving demand outside China.
Chinese iron ore futures rose sharply, extending its recent bull run.
Galaxy Futures said buying interest will remain elevated as investors seek to position for an expected demand bounce next year amid China's reopening from the pandemic and stabilizing property-construction activity.
Supply dynamics also look favorable for prices, ANZ said, noting that major iron ore miner Vale recently slashed its output guidance due to production disruptions.
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December 09, 2022 00:16 ET (05:16 GMT)Copyright (c) 2022 Dow Jones & Company, Inc.