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Eyes turn to US jobs report
Equity markets rose on Friday after China struck a more conciliatory tone on trade, lifting sentiment globally — though focus now shifts to the US non-farm payrolls report amid signs of labor market weakness.
China signals openness to US tariff talks, lifting global stocks and commodity currencies.
Officials in both Washington and Beijing confirm informal contact, raising hopes of trade thaw.
US jobs data due today may disappoint, with ADP, jobless claims, and PMI signals flashing downside risks.
Global stock markets climbed on Friday, led by gains in Asian equities and supported by rising US and European index futures, after China hinted at a renewed willingness to engage in tariff negotiations with the United States. The shift in tone from Beijing provided a needed lift to investor sentiment after weeks of tense rhetoric and tit-for-tat policy moves.
In a statement that markets interpreted as constructive, China’s Commerce Ministry revealed that the US had “repeatedly” reached out through official channels to initiate trade talks. The ministry said Beijing is actively “evaluating” the proposals — marking the most conciliatory language since the US launched sweeping tariff measures in April. The announcement sparked hope that a de-escalation phase may be on the horizon.
This was echoed in Washington. US Treasury Secretary Scott Bessent and White House economic adviser Kevin Hassett both described the situation as “encouraging.” Hassett told CNBC that informal discussions have taken place, and that China's recent move to ease tariffs on select US goods could be viewed as a goodwill gesture.
FX markets cautious as risk appetite improves
While global equities embraced the news, the foreign exchange market showed more restrained enthusiasm. The Japanese Yen continued to underperform — reflecting its role as a safe haven during risk-off periods — particularly after the Bank of Japan adopted a dovish posture and downgraded its growth outlook earlier in the week.
Commodity-linked currencies like the Australian Dollar and Canadian Dollar fared better, buoyed by hopes of improving trade flows and firmer global demand. The British Pound also edged higher, while the Euro and New Zealand Dollar came under mild pressure. The US Dollar and Swiss Franc were mixed, with the former stuck in a narrow range ahead of the highly anticipated US labor market data.
The currency market’s uneven response signals that while a risk-on mood is emerging, conviction remains shallow ahead of today’s critical macro event.
All eyes on US jobs report as slowdown fears build
Attention now turns to the April US non-farm payrolls (NFP) report — a crucial barometer for assessing whether recent economic softness is spreading into the labor market. Markets are bracing for a potential disappointment following a string of weaker-than-expected employment indicators this week.
Economists expect 130,000 jobs to have been added in April, down from March’s surprise gain of 228,000. Average hourly earnings are projected to rise 0.3% month-over-month, with the unemployment rate holding steady at 4.2%.
But risks are tilted to the downside. Initial jobless claims surged to 241,000 last week, pushing the four-week average higher to 226,000 — the highest since August 2023. The ADP private payrolls report showed a significant slowdown in hiring, with just 62,000 jobs added versus 147,000 in March. The employment sub-index of the ISM Manufacturing PMI also remained in contraction territory, despite a modest improvement.
If today's NFP confirms weakness, it could reignite recession concerns and intensify pressure on the Federal Reserve to resume monetary easing as early as June. Conversely, a solid report would help stabilize rate expectations and support further gains in risk assets.
