European stock markets were mixed on Friday, initially tumbling into the red before staging a small recovery, closing the week out barely changed.
Shares in oil producers were some of the biggest drags on the day.
The rise comes ahead of a key meeting at the weekend of the Organisation Petroleum Exporting Countries and its allies (OPEC+), and a last-minute drive by the European Union to agree on a price cap for Russian oil.
“This week oil has been staging gains amid optimism towards the potential loosening of COVID restrictions in China and the opening up of its economy at last, which could potentially unleash demand for crude oil from the world’s second largest economy,” Victoria Scholar, head of investment at Interactive Investor, said.
“At its October meeting, OPEC+ cut its daily oil production by 2 million barrels per day to try to boost prices. A recent media report that the cartel was considering hiking production was quickly refuted by Saudi Arabia. Given this week’s rally, perhaps the cartel will hold off from doing anything at all until China’s demand trajectory becomes clearer.”
Traders will have their eyes on a jobs report later on Friday for clues on the Federal Reserve’s next policy steps.
Economists predict that job creation slowed in November, as rising interest rates cooled the labour market. The non-farm payroll is expected to have risen by around 200,000, down from 261,000 in October.
Earlier this week Fed chair Jerome Powell signalled a downshift in the pace of interest rate hikes. Bets on where the central bank rate will peak have now dropped below 4.9%, according to swap markets. The current benchmark sits in a range between 3.75% and 4%.
Meanwhile, the Bloomberg Dollar Spot Index steadied after sinking to its lowest since June.
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Stocks fell in Asia after US equities struggled for direction, with the Nikkei (^N225) falling 1.6% on the day in Tokyo.
The Japanese yen’s five-day rally increased downward pressure on stocks while a Bank of Japan board member suggested the need for a policy assessment, which added to negative sentiment.
Elsewhere, Australian and New Zealand government bond yields slid during the session, following the lead from Treasuries on Thursday, when their rally gathered steam amid a pullback in expectations for Fed tightening.
The 10-year US benchmark yield rose slightly to 3.54% during Asian trading.