U.S. stock futures rise before jobs data, oil eyes 13% weekly fall

LONDON, April 1 (Reuters) – U.S. stock index futures rose on Friday ahead of U.S. employment data with markets watching for signs of inflation, while oil was poised for a 13% weekly fall following reserve releases.

Investors are fretting over whether inflationary pressures will force central banks into aggressive rate hikes, potentially triggering recessions.

U.S. March jobs data at 1230 GMT will be watched for indications of wage inflation, in addition to the headline jobs figure.

“Average hourly earnings are surging but less quickly than inflation,” said Sebastien Galy, senior macro strategist at Nordea Asset Management, adding the U.S. Federal Reserve may need to raise rates by 50 basis points in May.

Euro zone inflation climbed to 7.5% in March, data showed on Friday, hitting another record high with months left before it is set to peak, raising pressure on the European Central Bank to act to contain prices even as growth slows sharply. read more

Investors are also assessing recession risk from the Russia-Ukraine conflict.

European buyers of Russian gas faced an April 1 deadline to start paying in roubles, although Russian gas was flowing to Europe on Friday. read more

“The recession risk of selected countries such as Germany from the stopping of gas delivery would be non-negligible,” Galy said.

He added, however, that “Russia is essentially a petrol station. If a petrol station doesn’t sell its products, it goes bankrupt – they are not in a position of power”.

U.S. S&P futures rose 0.46%, indicating a higher open on Wall Street. European stocks (.STOXX) rose 0.53% and Britain’s FTSE 100 (.FTSE) gained 0.14%.

U.S. and European shares notched their biggest quarterly drops since the outbreak of the COVID-19 pandemic in 2020 in the quarter that ended on March 31.

But the quarterly drop in U.S. shares masked a late comeback in the S&P 500 index (.SPX), which rallied from a near-13% decline a month ago to finish the quarter off about 5%. read more

MSCI’s global share index (.MIWD00000PUS) was little changed on the day and is heading for a steady week, after retreating from a six-week high hit on Wednesday.

In Tokyo, the Nikkei (.N225) was down 0.56%, notching up a 1.7% weekly fall.

Supply disruption and surging raw material costs drove Japanese business confidence to a nine-month low last quarter. read more

Chinese blue-chips (.CSI300) rose 1.27%, helped by hopes for policy easing.

Oil dipped in and out of negative territory ahead of a meeting of International Energy Agency member nations set to discuss a release of emergency oil reserves alongside a huge planned release by the United States.

Oil is on course for a 12%-13% weekly fall – the sharpest in almost two years, after an earlier surge driven by the Ukraine conflict had seen prices rise by more than 30%.

U.S. crude futures fell 0.1% a barrel to $100.14 while Brent futures rose 0.38% to $104.94.

The closely-watched spread between U.S. two-year and 10-year notes is nearly zero.

An inversion in this part of the U.S. yield curve is viewed as a reliable signal that a recession may follow in one to two years. Benchmark 10-year notes last yielded 2.4078%, while the two-year yield was at 2.3834%.

The German 10-year government bond yield , a benchmark for the euro zone, rose 2.8 basis points to 0.58%, after jumping 39 bps in March, its biggest monthly rise since 2009, on expectations of monetary tightening. read more

“Government bond yields have moved up markedly in recent weeks and can be expected to trend higher over time due to inflationary pressures that are here to stay and responses by the main central banks,” said Christian Nolting, Global Chief Investment Officer at Deutsche Bank Private Bank in a note.

The dollar has benefited from safe-haven flows and expectations of rising U.S. rates. Against a basket of peers, the greenback was up 0.13% at 98.446, and it was up 0.61% against the yen at 122.42.

The euro was steady at $1.1060.

Safe-haven gold fell 0.55% after its biggest quarterly gain in two years. Spot gold was last quoted at $1,926.67 per ounce.

Additional reporting by Andrew Galbraith in Shanghai, Tom Westbrook in Singapore and Saikat Chatterjee in London; Editing by Simon Cameron-Moore, Catherine Evans and Barbara Lewis

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