Global shares hold near record highs, China's slip after Party's party

TOKYO: Global shares held near their record high on Friday as investors looked to U.S. jobs data for signs of balanced economic growth with tame inflationary pressure, while Chinese shares dropped a day after China's Communist Party celebrated its centenary.

European stocks are expected to open moderately higher, with both pan-European Euro Stoxx futures and Britain's FTSE futures trading up 0.4per cent.

Japan's Nikkei gained 0.2per cent and most other markets held firm but MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8per cent, due to decline in Chinese and Hong Kong shares.

Shanghai Composite fell 1.7per cent, on course to mark its biggest fall since March, as investors grew cautious that, with the big celebration out of way, China's monetary policy could be tightened.

Loo also Some investors also noted possible unease among overseas investors over President Xi Jinping's warning to foreign powers in a speech to mark his party's centenary, as Sino-U.S. tensions simmer over many issues.

"It is hard to expect loose monetary conditions like before," said Masahiko Loo, portfolio manager at AllianceBernstein in Tokyo.

Loo also reckoned, that given the increasingly strained state of Sino-U.S. relations, some overseas investors could have been unsettled by President Xi Jinping's warning to foreign powers during his speech to mark the Communist Party's centenary.

Xi said any foreign forces attempting to bully China would will "get their heads bashed".

"Foreign investors are probably turning cautious after hawkish rhetoric from China's President Xi Jinping," Loo said.

MSCI's All Country World index dipped 0.1per cent but stood close to an all time high hit earlier this week.

On Wall Street, the S&P 500 reached its sixth consecutive all-time closing high on Thursday, as a new quarter began with upbeat economic data.

Jobless claims continued their downward trajectory, touching their lowest level since the pandemic shutdown.

Monthly nonfarm payroll data, due out later on Friday, is expected to show a 700,000 increase in June, and economists expect wage growth in June of around 0.4per cent.

While the prospects of a strong economic recovery underpin equity markets, investors remained nervous that a sharp recovery from the pandemic could push up inflation to an uncomfortable level for the U.S. Federal Reserve.

"The situation remains uncertain and no one would have their forecast with high degree of confidence now. Markets will be very sensitive to any upticks in inflation," said Tomo Kinoshita, global market strategist at Invesco.

In bond markets, the 10-year U.S. yield stood at 1.466per cent, largely staying below 1.5per cent in the past couple of weeks, in part thanks to subsiding inflation expectations.

Shorter-dated bonds may come under heavier pressure if the jobs data points to rising inflationary pressure, which would lead investors to bet on earlier rate hikes, analysts said.

The two-year notes yield stood at 0.261per cent, not far from 15-month peak of 0.284per cent set last month.

In the currency market, the dollar was perched at a 15-month high on the yen and at multi-month peaks against other majors on Friday, as traders wagered strong U.S. labour data could lift it even further.

The dollar rose to as high as 111.66 yen, hitting its highest level since March last year.

The euro slipped to a three-month low of US$1.1837 overnight and last stood at US$1.1847.

The Australian dollar fell to US$0.7461, having slipped to its lowest level since December on Thursday.

Oil prices stood near their highest levels since 2018 on indications that OPEC+ producers could increase output more slowly than expected in coming months.

OPEC+ delayed its ministerial meeting until Friday to hold more talks on oil output policy, OPEC+ sources said on Thursday, after the United Arab Emirates blocked a plan for an immediate easing of cuts and their extension to the end of 2022.

U.S. crude futures traded at US$75.28 per barrel, almost flat on the day after going as high as US$76.22 on Thursday, its strongest since October 2018.

(Editing by Simon Cameron-Moore)