Key facts
- Global stocks are on track for their strongest weekly gain since May.
- Investor optimism is driven by robust earnings growth and AI enthusiasm.
- Middle East tensions have escalated with Houthi attacks on Saudi Arabia.
- Oil prices have risen, with Brent crude futures up 1% to $83 a barrel.
- Markets are awaiting U.S. jobs data, which could influence Federal Reserve rate decisions.
- Gold prices have seen a significant weekly increase of over 6%.
Global stocks are on track for their strongest weekly gain since May, buoyed by robust earnings growth and enthusiasm surrounding artificial intelligence, as investors await crucial U.S. jobs data. The MSCI's All-World index has risen 2.3% this week, while Europe's STOXX 600 was lifted by drugmaker and technology shares.
Investor optimism is tempered by escalating tensions in the Middle East, following attacks by Yemen's Iran-aligned Houthis on Saudi Arabia. This geopolitical flare-up has contributed to market volatility and boosted oil prices, with Brent crude futures rising 1% to $83 a barrel, though they are still set for a weekly loss.
The focus for markets is the U.S. payrolls report, expected to show a rise of 80,000 jobs in July with the unemployment rate holding steady at 4.2%. Analysts suggest a strong jobs number could reinforce expectations of higher-for-longer interest rates from the Federal Reserve, while a weaker print might shift expectations towards a more dovish policy stance.
Money markets are currently split on the likelihood of a Federal Reserve rate hike next month, making the jobs data particularly influential. The dollar held steady against the yen, which is still reacting to recent currency market interventions. Treasury yields remained largely unchanged as trading activity was subdued ahead of the data release. Gold prices, however, have mirrored the dollar's weakness, rising over 6% this week to their highest in about six weeks.