Stocks edge higher as bond sell-off calms

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European stocks edged higher on Friday, as a sell-off in bond markets abated and investors welcomed forecast-beating results from Amazon, before turning attention to the closely watched US jobs report for clues on how the world’s largest economy held up under rising borrowing costs. 

Europe’s region-wide Stoxx 600 Europe index was up 0.1 per cent higher in early trade, after three successive days of declines, while France’s Cac 40 added 0.2 per cent and Germany’s Dax was flat. 

The rebound echoed markets in Asia, where China’s benchmark CSI 300 and Hong Kong’s Hang Seng both gained 0.4 per cent, after the mainland’s central People’s Bank of China pledged to divert financial resources to the country’s struggling private sector. Japan’s Topix rose 0.4 per cent. 

In the US, futures contracts pointed to the S&P 500 opening 0.2 per cent higher later in the day, and contracts tracking the tech-focused Nasdaq 100 were up 0.4 per cent. 

Market sentiment improved after tech heavyweights Amazon and Apple reported stronger-than-expected results after the US closing bell on Thursday, helping to justify the surge in technology stocks since the start of the year.

Amazon gained 8.7 per cent after trading hours, but Apple lost 2 per cent, as investors grew cautious after the company said its total revenues declined for the third successive quarter. The two companies account for nearly 20 per cent of the Nasdaq’s value. 

“Even if the shareholders aren’t pleased with the results, the broader market could experience a sentiment boost” said Mike Zigmont, head of research and trading at Harvest Volatility.

Corporate results steadied global stock markets after a sharp three-day sell-off, triggered by hotter than expected US economic data, and further exacerbated by the rise in US government debt yields after the Treasury lifted its issuance target for the coming quarter. 

The yield on the benchmark 10-year Treasury was flat at 4.19 per cent on Friday, having slipped from the nine-month high it hit a day earlier. Bond yields fall as prices rise. 

Investors turned their attention to the key US non-farm payrolls data coming later in the day, which is expected to show that the economy added 200,000 jobs in July, down from 209,000 in the previous month. 

Signs of a cooling labour market come more than a year after the US Federal Reserve first began to lift interest rates in efforts to tackle raging inflation, and could bolster investors’ beliefs that the country’s historic tightening cycle is approaching its end.