Stocks wobble as traders eye key US jobs data

Global stocks have meandered ahead of key US jobs data as investors consider the prospects of the world avoiding a broader trade war.

At the same time, the yen has hit its highest in nearly two months on rising odds of more rate hikes in Japan this year.

In a week that started with US President Donald Trump kicking off a trade war, investors have been hesitant in making major moves as threatened duties on China were implemented.

Beijing's measured tit-for-tat response has left room for negotiations, analysts say, and that has allowed traders to focus on the AI theme in China in the wake of home-grown start-up DeepSeek's breakthrough.

European futures pointed to a subdued open after the pan-European STOXX 600 index closed at a record high on Thursday on the back of robust company earnings.

European stocks have staged their best performance in a decade against Wall Street in the first six weeks of 2025, but focus is now on whether those gains can be sustained.

Eurostoxx 50 futures were down 0.41 per cent while FTSE futures fell 0.39 per cent. DAX futures eased 0.21 per cent.

Futures for Nasdaq and S&P 500 were down about 0.2 per cent as shares of Amazon slipped in extended trading overnight on weakness in the retailer's cloud computing unit and soft forecast.

In Asia, Hong Kong's Hang Seng Index hit a three-month high, poised for a four per cent rise in the week, its strongest weekly performance fuelled by DeepSeek-led AI bets.

China's blue-chip stock index was 0.4 per cent higher after touching a one-month high leaving MSCI's broadest index of Asia-Pacific shares outside Japan at its highest since mid-December.

"Whilst there is considerable noise and uncertainty, we don't see escalating trade tensions as a game changer in the prospects for the Chinese market," said James Cook, investment director for emerging markets at Federated Hermes.

"China's bigger problem is not Trump but the domestic economy."

On the economic front, jobless claims, layoffs and labour costs provided a prologue to Friday's keenly anticipated January employment report, with the data likely to show the impact of wild fires in California and cold weather across much of the country.

Non-farm jobs were expected to have increased by 170,000 last month after surging 256,000 in December, a Reuters poll of economists showed.

"Markets could face some volatility around the data if it beats expectations, but it won't change the path of the FOMC policy as more data will be needed," said Anderson Alves, a trader with ActivTrades.

Markets are pricing in 43 basis points of easing this year from the Fed with a rate cut in July fully priced in as policymakers are in no hurry to start the rate-cutting cycle again.

While political uncertainties kept investors wary, fears have eased that Trump's approach to tariffs could escalate into a global trade war.

The Japanese yen has been on a tear this week buoyed by safe-haven flows as well as rising expectations of the Bank of Japan increasing interest rates this year, with markets pricing in 34 basis points of hikes.

The yen touched 150.96 per dollar in early trading, its strongest level since December 10 but was last a tad weaker at 151.71.

The currency is headed for an over two per cent rise against the dollar this week, its strongest weekly performance since late November.

Sterling was 0.1 per cent lower at $1.24255 after dropping 0.5 per cent on Thursday as the BoE cut interest rates by 25 basis points but warned it would be cautious going forward, in the face of a potential inflation uptick and geopolitical worries.

Oil prices rose marginally on Friday but were on track for a third straight week of decline.

Gold prices steadied near record-high levels and were headed for their sixth successive weekly gain driven by safe-haven flows.