- HK stocks set for strongest weekly performance in 4 months
- Yen at two month high on rising bets on rate hikes this year
- Gold steady near record peak, oil set for third weekly drop
SINGAPORE, Feb 7 (Reuters) - Global stocks meandered on Friday ahead of key U.S. payrolls data as investors considered prospects that a broader trade war could be averted, while the yen hit its highest in nearly two months on rising odds of more rate hikes in Japan this year.
In a week that started with U.S. President Donald Trump kicking off a trade war, investors have been hesitant in making major moves as threatened duties on China were implemented.
Beijing's measured tit-for-tat response has left room for negotiations, analysts say, and that has allowed traders to focus on the AI theme in China in the wake of home-grown start-up DeepSeek's breakthrough.
European futures pointed to a subdued open after the pan-European STOXX 600 index closed at a record high on Thursday on the back of robust company earnings.
European stocks have staged their best performance in a decade against Wall Street in the first six weeks of 2025, but focus is now on whether those gains can be sustained.
Eurostoxx 50 futures were down 0.41%, while FTSE futures fell 0.39%. DAX futures eased 0.21%.
Futures for Nasdaq and S&P 500 were down about 0.2% as shares of Amazon slipped in extended trading overnight on weakness in the retailer's cloud computing unit and soft forecast.
In Asia, Hong Kong's Hang Seng Index hit a three-month high, poised for a 4% rise in the week, its strongest weekly performance fuelled by DeepSeek-led AI bets.
China's blue-chip stock index was 0.4% higher after touching a one-month high leaving MSCI's broadest index of Asia-Pacific shares outside Japan at its highest since mid-December.
"Whilst there is considerable noise and uncertainty, we don’t see escalating trade tensions as a game changer in the prospects for the Chinese market," said James Cook, investment director for emerging markets at Federated Hermes.
"China's bigger problem is not Trump but the domestic economy."
On the economic front, jobless claims, layoffs and labour costs/productivity provided a prologue to Friday's keenly anticipated January employment report, with the data likely to show the impact of wild fires in California and cold weather across much of the country.
Nonfarm payrolls are expected to have increased by 170,000 jobs last month after surging 256,000 in December, a Reuters poll of economists showed.
"Markets could face some volatility around the data if it beats expectations, but it won't change the path of the FOMC policy as more data will be needed," said Anderson Alves, a trader with ActivTrades.
Markets are pricing in 43 basis points of easing this year from the Fed with a rate cut in July fully priced in as policymakers are in no hurry to start the rate-cutting cycle again.
While political uncertainties kept investors wary, fears have eased that Trump's approach to tariffs could escalate into a global trade war.
RISING YEN
The Japanese yen has been on a tear this week buoyed by safe-haven flows as well as rising expectations of the Bank of Japan increasing interest rates this year, with markets pricing in 34 basis points of hikes for the year.
The yen touched 150.96 per dollar in early trading, its strongest level since December 10 but was last a tad weaker at 151.71. The currency is headed for an over 2% rise against the dollar this week, its strongest weekly performance since late November.
Sterling was 0.1% lower at $1.24255 after dropping 0.5% on Thursday as the BoE cut interest rates by 25 basis points but warned it would be cautious going forward, in the face of a potential inflation uptick and geopolitical worries.
Oil prices rose marginally on Friday but were on track for a third straight week of decline.
Gold prices steadied on Friday near record-high levels and were headed for their sixth successive weekly gain driven by safe-haven flows.
Reporting by Ankur Banerjee; additional reporting by Stephen Culp, Marc Jones and Alun John; editing by Shri Navaratnam and Sam Holmes
Source: Reuters