Top 5 Things to Know in the Market on Friday

Investing.com - Here are the top five things you need to know in financial markets on Friday, June 7:

1. Jobs report on watch for impact on rates

The U.S. Labor Department will publish its monthly employment report for May at 8:30 AM ET (12:30 GMT) Friday.

Analysts forecast that the U.S. economy created about 185,000 jobs in May, while the unemployment rate is expected to remain steady at 3.6%.

Investors will keep a close eye on the data as Wednesday’s ADP release showed that job creation hit a nine-year low in May. Despite the worse-than-expected number, markets cheered the “bad news” as fuel for the Federal Reserve to embark on policy easing.

2. Pence confirms tariffs on Mexico will go into effect ahead of further talks

Talks between the U.S. and Mexico over the border issue will continue in Washington on Friday after Mexican Foreign Minister Marcelo Ebrard confirmed that his country will deploy 6,000 National Guardsmen to its southern border with Guatemala in an attempt to stop the flow of immigrants from Central America.

U.S. Vice President Mike Pence said that he was “encouraged” by the efforts but that the 5% tariff increase scheduled for Monday was still on the table.

“At this point the tariffs are going to be imposed on Monday,” Pence said, adding that the final decision would depend on U.S. President Donald Trump.

3. Global stocks extend rally on hopes for U.S.-Mexico negotiations

Global stocks traded higher on Friday, extending a rally on hopes that negotiations between the U.S. and Mexico could avoid escalating tariffs.

With stock markets in China and Hong Kong closed for a holiday, Asian shares ended higher on expectations global central banks will soon embark on an easing cycle to combat the slowdown in the global economy.

France’s CAC 40 led gains in European bourses as investors cheered news that Sanofi (PA:SASY) had appointed Swiss rival Novartis' executive Paul Hudson as its new boss.

While investors looked ahead to trade negotiations and jobs data, U.S. futures pointed to a higher open. Dow futures gained 83 points, or 0.3%, S&P 500 futures rose 9 points, or 0.3%, while Nasdaq 100 futures traded up 31 points, or 0.4%.

Read more: Can The Market Rally Without FAANG? - Jeff Miller

4. Blackout period to see Fed officials debate rate cuts

With the blackout period ahead of the Fed’s June 18-19 policy meeting set to kick off on Saturday, markets will brace for a lack of further comments from officials on the possibility of interest rate cuts.

The June meeting will include updated economic projections that will reveal policymakers’ outlook on the economy and interest rates in the face of escalating trade tensions.

After Fed Chair Jerome Powell indicated a willingness to “act as appropriate to sustain the expansion”, markets are pricing in a 70% chance that rates are a quarter point lower after the July meeting and a more-than-50% chance that rates will be a half point lower following the September decision, according to Investing.com’s Fed Rate Monitor Tool.

5. Yuan drops as China’s central bank promises willingness to ease policy

The offshore yuan fell the most in more than three weeks against the U.S. dollar, as People’s Bank of China Governor Yi Gang hinted that there is no lower bound for the currency and indicated he was prepared to embark on further policy easing to combat economic fallout from the trade dispute with the U.S.

The Chinese currency fell as much as 0.5% against the dollar. Its biggest drop since May 13 took it to lows not seen since mid-November.

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