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August 21, 2017

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World markets push higher ahead of US jobs data

LONDON/HONG KONG--Global shares rose and the euro steadied near a two-week high against the dollar on Friday as investors awaited U.S. jobs data and took heart from the European Central Bank's assurances that it is ready to buy the bonds of troubled eurozone governments.

The main market mover of the day is likely to be the monthly U.S. payrolls report due at 1230 GMT. Recent indicators have suggested the world's largest economy is gradually picking up, but investors are looking for firmer evidence.

Following rises in Asian equities, the pan-European FTSEurofirst 300 index was up 0.5 percent by 0945 GMT, putting it on course for 1.5 percent rise this week. The MSCI index of global shares, set for a similar gain, was up 0.2 percent.

The euro, closely linked to the bloc's debt crisis, dipped back to US$1.30, but remained close to the two-week high of US$1.3032 hit on Thursday.

Wall Street was poised for a flat opening, with Dow futures and the broader S&P 500 futures more or less flat. How they actually open will depend on the payrolls data, which are unveiled by the government an hour before the market bell.

Europe's financial crisis has for once provided relatively few distractions for markets this week, though Spain's reluctance to tap a new bond-buying facility from the European Central Bank is causing investors some concern. The yield on the country's 10-year bonds has edged back up toward the 6-percent mark, an expensive rate at which to borrow.

On Thursday night, Spain's Finance Minister Luis de Guindos insisted that the country "doesn't need a bailout."

While the country may not want rescue loans for its government, it may still approach the eurozone's emergency funds, which would let the ECB to start buying Spanish bonds, keeping a lid on the country's near-term borrowing rates.

De Guindos conceded that Spain was at the epicenter of Europe's debt crisis, which is entering its fourth year. In October 2009, then newly elected Greek Prime Minister George Papandreou revealed that Greece's public finances were in even worse shape than feared.

"I would even say that the future of the battle of the euro will be waged in Spain," de Guindos told an audience at the London School of Economics.

Markets were reassured by comments on Thursday from ECB President Mario Draghi that the bank was primed to buy Spain's bonds if it requested aid, and that Europe now had a "fully effective backstop mechanism in place" to protect the euro.

Senior eurozone central bank sources told Reuters on Friday that the ECB was preparing for two months of large scale purchases one it deployed its program, after which it would assess the situation.

Earlier, Asian stocks advanced, with Japan's Nikkei 225 index closing up 0.4 percent at 8,863.30 after the Bank of Japan announced no change in the country's key interest rate following a two-day policy meeting.

South Korea's KOSPI gained 0.1 percent to 1,995.17 and Hong Kong's Hang Seng added 0.5 percent to 21,012.38.

Markets in China are closed for a public holiday.

In other markets:

— Manila closed flat, edging down 3.90 points to 5,439.84.

— Wellington rose 0.59 percent, or 22.86 points, to 3,904.85.

— Sydney rose 0.94 percent, or 42.0 points, to 4,494.4.

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