The Middle East conflict remains a key source of pressure for markets, while crude oil is on track for its first weekly gain in three weeks. At the same time, weak earnings have weighed on the technology sector, affecting sentiment in both Asia and the US. Investors are also focused on the US May employment report, where payroll growth is expected to slow to 88k. However, with the new Fed chair in place, expectations for the June FOMC meeting appear largely fixed, limiting the potential policy impact of the data.

Asia Pacific Markets

Asia Pacific equities failed to recover from Thursday’s losses despite the rebound in US stocks. Major regional bourses declined, with South Korea’s Kospi falling sharply and China’s CSI 300 also under pressure. The dollar stayed near JPY160 as markets continued to test Japanese officials, while a BOJ rate hike later this month is almost fully priced in. In India, the central bank held rates steady but delivered a hawkish message and announced measures aimed at attracting foreign capital, helping lift the rupee.

European Markets

The eurozone’s growth picture weakened after Q1 GDP was revised to a 0.2% contraction from an initial 0.1% expansion, mainly due to Ireland’s much deeper reported decline. Even so, markets remain confident that the ECB will raise rates next week. The euro continues to trade within its recent range, while sterling remains mostly inside last Friday’s levels and has struggled to hold above its 20-day moving average. European stocks extended their recovery, and regional yields were little changed on the week.

American Markets

In North America, attention is centered on US and Canadian labor market data. US payroll growth is expected to slow after stronger March and April figures, while unemployment is forecast to remain at 4.3%. Canada is expected to report only a modest jobs gain after losses earlier this year, but the Bank of Canada is still widely seen as holding rates next week. The Canadian dollar recovered after recent weakness, while US equity futures pointed lower, led by pressure on Nasdaq after tech-sector disappointment.