Stocks Extend September Rally as Gold Tops $3,800: Markets Wrap

(Bloomberg) — Stocks rose at the start of a week that will be dominated by a series of labor market reports, with traders betting the data will reinforce expectations for US interest rate cuts. Gold set a fresh record.

Futures for the S&P 500 climbed 0.5%, keeping the benchmark on track for its best September since at least 2013, even as the month is typically difficult for stocks. Gold surged beyond $3,800 an ounce, lifted by a back-to-back drop in the US dollar and the risk of a looming US government shutdown.

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Treasuries rose across the curve, with the 10-year yield falling three basis points to 4.14%. UK gilts held gains as Chancellor of the Exchequer Rachel Reeves addressed the Labour party conference.

A busy week of data releases will culminate in Friday’s nonfarm payrolls report, as traders price in two Federal Reserve rate cuts by January to support the labor market. In the mix is the risk of a US government shutdown amid an impasse in Congress that could delay some releases.

The momentum in markets is “driven by a Goldilocks environment of optimistic growth prospects alongside expectations of a more dovish Fed,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg. “There might be some adverse effects if the shutdown were to prevail for a longer period, which is not our base case.”

Friday’s payrolls report is expected to show that the US economy added 50,000 jobs in September, in line with the average from the past three months. The jobless rate is projected to hold steady at 4.3%.

Before then, Tuesday’s JOLTS report is expected to show a decline in job openings, while Wednesday’s data on company hiring is likely to confirm a further slowdown. Fed policymakers including Christopher Waller, Alberto Musalem and Raphael Bostic are due to speak Monday.

Global stocks are poised to extend their rally through year-end, driven by a resilient US economy, supportive valuations and a more dovish Fed stance, Goldman Sachs Group Inc. strategists said.

A team led by Christian Mueller-Glissmann turned overweight on stocks over a three-month view, noting that the asset class often performs well during late-cycle slowdowns when policy support is in place.

“Good earnings growth, Fed easing without a recession and global fiscal policy easing will continue to support equities,” the team wrote in a note. “With anchored recession risk, we would buy dips in equities into year-end.”

Top congressional leaders will meet with President Donald Trump at the White House a day before federal funding would expire if the two parties can’t agree on a short-term spending bill. The bill would only fund the government until mid-November and must pass before Oct. 1.

Strategists said the recent negative revisions and downtrend in jobs numbers will raise the stakes for Friday’s release.

“We could be set for some notable volatility around these prints going forward as the breakeven payroll rate now seems to be around or under 50,000 a month,” wrote Jim Reid, global head of macro research and thematic strategy at Deutsche Bank AG. “We are not really conditioned to negative prints being within that margin of error, so reactions to such prints may be not rational.”

Corporate News:

Huawei Technologies Co. is preparing to sharply ramp up production of its most advanced artificial intelligence chips over the next year, aiming to win customers in the world’s biggest semiconductor market while Nvidia Corp. struggles with geopolitical headwinds. Alarm company Verisure Plc is targeting a market value of as much as €13.9 billion ($16.3 billion) in a Stockholm initial public offering that’s set to be Europe’s largest in three years. AstraZeneca Plc, the UK’s biggest drugmaker, plans to list regular shares on the New York Stock Exchange to attract more investors in a further tilt toward the US, where it makes almost half of its revenue. Nidec Corp. shares slid after the company discovered more suspected cases of improper bookkeeping, heightening fears the world’s biggest maker of mini motors may come under regulatory scrutiny for a potential delisting. Jaguar Land Rover has sought £2 billion ($2.7 billion) in emergency funding from global banks as the carmaker tries to ease the financial strain of a cyberattack that forced it to halt production, the Economic Times reported. Shares of Alibaba Group Holding Ltd. rallied as analysts touted improving growth prospects for the company’s cloud and artificial intelligence businesses. First Brands Group Holdings has filed for Chapter 11 bankruptcy, capping weeks of turmoil sparked by creditor concern over the auto-supplier’s use of opaque off-balance sheet financing. Denmark’s Genmab A/S agreed to acquire Merus NV, a Dutch drugmaker that’s developing a treatment for cancer of the head and neck, for about $8 billion. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.5% as of 6:59 a.m. New York time Nasdaq 100 futures rose 0.6% Futures on the Dow Jones Industrial Average rose 0.4% The Stoxx Europe 600 rose 0.3% The MSCI World Index was little changed Currencies

The Bloomberg Dollar Spot Index fell 0.2% The euro rose 0.1% to $1.1720 The British pound rose 0.2% to $1.3428 The Japanese yen rose 0.6% to 148.66 per dollar Cryptocurrencies

Bitcoin rose 1.2% to $112,144.73 Ether rose 1.6% to $4,118.19 Bonds

The yield on 10-year Treasuries declined three basis points to 4.14% Germany’s 10-year yield declined two basis points to 2.72% Britain’s 10-year yield declined three basis points to 4.71% Commodities

West Texas Intermediate crude fell 1.9% to $64.47 a barrel Spot gold rose 1.5% to $3,817.93 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Anand Krishnamoorthy.

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