Investing.com - Here are the top five things you need to know in financial markets on Friday, June 1:
1. Jobs report on tap
Investors will closely follow the May jobs report, due at 8:30AM ET (12:30GMT) on Friday, for any clues on future monetary policy as maximum sustainable employment is one the Federal Reserve’s key objectives.
Nonfarm payrolls are expected to show the U.S. economy created 189,000 jobs in May, while economists forecast the jobless rate to remain steady at 3.9%
With unemployment at a 17-year low, the main focus will be on average hourly earnings as the Fed keeps an eye on wage inflation. On an annualized basis, the increase in average hourly earnings is expected to accelerate to 2.7% in May, from the prior 2.6%.
Minneapolis Fed president Neel Kashkari will be the first policymaker to speak after the data release as he is scheduled for an appearance at 8:55AM ET (12:55GMT).
Also on Friday’s economic calendar, traders will watch the Institute of Supply Management’s manufacturing purchasing managers’ index for May, scheduled for release at 10:00AM ET (14:00GMT).
2. Trade tensions remain front and center
Canada and Mexico retaliated against the United State's decision on Thursday to impose tariffs on steel and aluminum imports and the European Union had its own reprisals ready to go, reigniting investor fears of a global trade war.
Canada, the largest supplier of steel to the United States, will impose tariffs covering C$16.6 billion ($12.8 billion) on imports from the United States, including whiskey, orange juice, steel, aluminum and other products, Canadian Foreign Minister Chrystia Freeland said.
"The American administration has made a decision today that we deplore, and obviously is going to lead to retaliatory measures, as it must," Prime Minister Justin Trudeau said at a news conference with Freeland.
Mexico announced what it described as "equivalent" measures on a wide range of U.S. farm and industrial products.
The EU threatened tariffs on Harley Davidson (NYSE:HOG) motorcycles and bourbon, measures aimed at the political bases of U.S. Republican legislators. EU members have given broad support to a European Commission plan to set duties on 2.8 billion euros ($3.4 billion) of U.S. exports if Washington ends tariff exemptions. EU exports potentially subject to U.S. duties are worth 6.4 billion euros ($7.5 billion).
3. European political tensions ease
Late on Thursday, leaders of Italy's anti-establishment parties revived coalition plans, apparently ending three months of political turmoil.
The populist parties Five-Star and League formed a government and received the approval from the president.
Meanwhile in Spain, Prime Minister Mariano Rajoy lost a vote of no-confidence on Friday with 180 representatives voting to force him out of government, 169 voting against the measure and one abstention.
However, the takeover by opposition socialist party leader Pedro Sanchez pledged to follow through on a recently past budget, suggesting the euro zone’s fourth economy will remain on course.
4. Global stocks mixed in balance of trade and political tensions
Global stocks traded mixed on Friday as investors weighed the tradeoff between tariffs and easing political uncertainty in Europe.
Asian shares followed Wall Street lower as U.S. allies struck back against Trump’s tariffs and investors worried over the region's factories and exports.
European stock markets however were mostly higher with Italian stocks leading the gains as political uncertainty in Italy and Spain faded.
U.S. futures also pointed to a higher open on Wall Street, while investors looked ahead to jobs data. U.S. futures also pointed to a higher open on Wall Street, while investors looked ahead to jobs data. At 6:02AM ET (10:02GMT), the blue-chip Dow futures gained 126 points, or 0.52%, S&P 500 futures rose 13 points, or 0.49%, while the Nasdaq 100 futures traded up 24 points, or 0.34%.
5. U.S. drilling watched for signs of further escalation in production
Concerns over increasing output continue to be front and center on Friday after the Energy Information Administration (EIA) said a day earlier that U.S. crude production jumped 215,000 barrels per day (bpd) to 10.47 million bpd in March, a new monthly record.
The weekly installment of drilling activity from Baker Hughes later on Friday will provide investors with fresh insight into U.S. oil production and demand.
Data last week showed the number of U.S. oil rigs resumed their climb, raising the prospect of a continued expansion in U.S. output.
U.S. crude oil futures lost 0.30% to $66.84 at 6:04AM ET (10:04GMT), while Brent oil advanced 0.06% to $77.61.