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HK stocks set for greatest weekly performance in 4 months

Yen at two month high on increasing bets on rate hikes this year

near record peak, oil set for 3rd weekly drop

By Ankur Banerjee

SINGAPORE, Feb 7 (Reuters) - Global stocks meandered on Friday ahead of crucial U.S. payrolls data as financiers thought about potential customers that a broader trade war might be averted, while the yen struck its highest in almost two months on increasing chances of more rate hikes in Japan this year.

In a week that started with U.S. President Donald Trump kicking off a trade war, financiers have been hesitant in making significant relocations as threatened tasks on China were executed.

Beijing's measured tit-for-tat action has left room for settlements, experts state, which has enabled traders to concentrate on the AI style in China in the wake of home-grown start-up DeepSeek's advancement.

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

European stocks have staged their finest 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%, while FTSE futures fell 0.39%. DAX futures relieved 0.21%.

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

In Asia, Hong Kong's Hang Seng Index struck a three-month high, poised for a 4% rise in the week, its strongest weekly performance sustained by DeepSeek-led AI bets.

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

"Whilst there is significant noise and uncertainty, we don ´ t see escalating trade stress as a video game changer in the potential customers for the Chinese market," said James Cook, investment director for emerging markets at Federated Hermes.

"China's larger issue is not Trump however the domestic economy."

On the economic front, unemployed claims, layoffs and labour costs/productivity supplied a beginning to Friday's keenly awaited January employment report, with the information most likely to reveal the impact of wild fires in California and cold weather condition throughout much of the country.

Nonfarm payrolls are expected to have increased by 170,000 jobs last month after surging 256,000 in December, a Reuters survey of economic experts revealed.

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

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

While political uncertainties kept investors careful, worries have reduced that Trump's approach to tariffs could intensify into a global trade war.

RISING YEN

The Japanese yen has been on a tear this week buoyed by safe-haven flows in addition to increasing expectations of the Bank of Japan increasing interest rates this year, larsaluarna.se with markets pricing in 34 basis points of walkings for the year.

The yen touched 150.96 per dollar in early trading, its greatest level given that December 10 however was last a little weaker at 151.71. The currency is headed for an over 2% increase against the dollar today, its greatest weekly efficiency given that late November.

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

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

Gold rates steadied on Friday near record-high levels and were headed for their 6th successive weekly gain driven by safe-haven circulations.

(Reporting by Ankur Banerjee; additional reporting by Stephen Culp, Marc Jones and Alun John; modifying by Shri Navaratnam and Sam Holmes)