World markets drift ahead of U.S. jobs report

HONG KONG - World stock markets were uneven Friday as investors awaited U.S. job numbers that could influence how much the Fed raises interest rates this year.

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Japanese shares sagged on the strengthening yen.

KEEPING SCORE: European benchmarks were mixed in early trading. France's CAC 40 rose 0.6 per cent to 4,255.33 while Germany's DAX dipped 0.2 per cent to 9,378.43. Britain's FTSE climbed 0.2 per cent to 5,911.46. U.S. stocks were poised to open lower. Dow futures lost 0.1 per cent to 16,318.00 and broader S&P 500 futures edged 0.1 per cent lower to 1,904.60.

JANUARY JOBS: Market attention is focused on the U.S. government's employment report for last month, which will be released later Friday after Asian markets have closed. Analysts expect a solid 200,000 jobs to be added, with the unemployment rate holding steady at 5 per cent. However, weaker than expected figures would add to other downbeat economic data that's been piling up in recent days, including contracting U.S. and Chinese factory activity and a disappointing U.S. service sector index. Taken together, it could all be used to support the case for the Fed putting off further interest rate hikes, a prospect that's already helped push down the dollar.

ANALYST VIEW: "What's worrying the markets is some Fed policymakers' belief that recent developments are not sufficiently serious or persistent to warrant a material change in the central bank's outlook and view on the gradual path of the rate hike cycle," IG market strategist Bernard Aw wrote in a commentary. "The expectations disparity will heighten market volatility."

ASIA'S DAY: Japan's benchmark Nikkei 225 index dropped 1.3 per cent to close at 16,819.59 as the dollar weakened against the yen, hurting shares of the country's export producers. South Korea's Kospi edged up 0.1 per cent to 1,917.79, Hong Kong's Hang Seng climbed 0.6 per cent to 19,288.17 and the Shanghai Composite in mainland China shed 0.6 per cent to 2,763.49. Australia's S&P/ASX 200 dipped 0.1 per cent to 4,976.20. Benchmarks in Southeast Asia rose. Trading volumes in Asia will be muted as many exchanges shut for all or part of the Lunar New Year holiday next week.

ENERGY: Oil futures retreated, with benchmark U.S. crude down 16 cents, or 0.5 per cent, to $31.56 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 56 cents to settle at $31.72 on Thursday after jumping 8 per cent the day before. Brent crude, a benchmark for international oil prices, lost 46 cents, or 0.5 per cent, to $34 a barrel in London.

CURRENCIES: The dollar weakened to 116.81 yen from 116.96 yen in the previous day's trading, bringing its loss for the week to 3.5 per cent. The euro eased to $1.1194 from $1.1199, its highest in more than three months.


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