London’s benchmark index drifted into negative territory on Friday as investors positioned cautiously ahead of the closely watched U.S. non-farm payrolls report.
The FTSE 100 was down 0.04% as of 03:18 ET, while Germany’s DAX gained 0.10% and France’s CAC 40 rose 0.04% in early European trading.
Sterling made modest gains against the dollar, with GBP/USD up 0.13% at 1.3542, providing some support for domestically focused stocks.
Consensus forecasts point to an increase of 55,000 U.S. non-farm payrolls for August, following a decline of 23,000 recorded in July.
The unemployment rate is expected to hold steady at 4.1%, with markets watching closely for any surprise that could shift Federal Reserve expectations.
Analysts at ING noted that comments from Federal Reserve Governor Waller pushed U.S. Treasury yields lower on Thursday before a stronger ISM services reading subsequently sent yields higher.
ING said a payrolls increase below 25,000, combined with benign core CPI of less than 0.2% month-on-month next week, would likely be required to delay an interest-rate increase.
Friday marks the Federal Reserve’s final communication before its blackout period ahead of the September 16 policy decision, raising the stakes for any remarks made by officials.
Geopolitical developments in the Middle East continued to weigh on sentiment, with South Korea’s presidential office saying it was considering “contributions” to U.S.-led security efforts in the Strait of Hormuz, while adding that “nothing has been decided yet.”
Vice President JD Vance told a White House briefing he was “extremely skeptical” that Iranian claims that a U.S. strike had hit a wedding party were accurate, and when asked whether fighting would end by the midterms, he added “I wouldn’t call it a war.”
Treasury Secretary Scott Bessent said the European Union had “officially” joined the U.S.-led “Operation Economic Outcast” sanctions campaign against Iran, reiterating that the campaign aims to “sever every economic lifeline” sustaining Tehran.
Traffic through the Strait of Hormuz remained well below pre-conflict levels, with 102 transits recorded last week compared with more than 130 per day previously, as tanker operators continued routing oil through a U.S.-guided southern corridor near Oman.
Iranian officials said a recent series of U.S. strikes killed at least 18 people and wounded 142, while The Wall Street Journal reported that President Donald Trump was privately considering declaring the war over.
The Pentagon extended troop deployments in the region amid the ongoing uncertainty, adding further complexity to an already volatile geopolitical picture for energy markets.
Brent crude rose 0.45% to $95.90 a barrel and WTI increased 0.43% to $91.68, reflecting continued supply concerns linked to Hormuz disruptions.
Gold futures declined 0.57% to $4,514.15, while spot gold fell 0.13% to $4,467.71, as some safe-haven demand eased ahead of the payrolls release.