US pre-open: Equity markets seen muted ahead of payrolls, wage data key

US futures pointed to a muted open on Wall Street on Friday as investors awaited the release of the latest non-farm payrolls report, with attention firmly on the wage growth figures.

At 1215 GMT, Dow Jones Industrial Average, S&P 500 and Nasdaq futures were all flat.

Overnight, it emerged that US President Trump has agreed to meet with Kim Jong Un by May for talks about its nuclear weapons, something North Korea has been seeking with an American president for more than 20 years.

James Hughes, chief market analyst at AxiTrader said: "This was announced just after the President announced the tariffs he is imposing, which do give exemption to Canada and Mexico, which was rumoured. There are still negotiations over the tariffs and other possible exemptions, so as normal everything is still pretty unclear.

"I’m surprised we haven’t seen more of a market reaction to the North Korean story, with stocks finishing higher but without any real clear direction. This could well have been offset by the tariff news as the announcement has bought widespread condemnation from all quarters. The feeling is that, with the President looking to shift on tariffs if nations produce reciprocal tax changes, there could be a lot on uncertainty as to how well this will work, and with talks of retaliatory tariffs from Europe this could get uglier. Paul Ryan has been one of the most vocal about his condemnation of the tariff plan, someone who usually keeps his condemnation to himself for the sake of the party."

The main focus on Friday will be the release of the key non-farm payrolls report, which is due out in the US at 1330 GMT, along with the unemployment rate and average hourly earnings.

The report is expected to show that 205,000 jobs were added in February, up a touch from January's 200,000, while the unemployment rate is forecast to have fallen to 4% from 4.1%. Average hourly earnings will garner the most attention, however, given the emphasis that new Federal Reserve governor Jerome Powell has put on strengthening wage growth. Earnings are expected to have slipped to 0.2% from 0.3% on a monthly basis.

Hughes said: "Wages are still looking like the most important reading here as the big movements in markets will be on hints towards three or four rate hikes. Slightly higher than expected wage growth could see a slight pop higher in inflation expectations which in turn could give the US dollar a short term shot in the arm.

"But this is the non-farm payroll so expect the normal amounts of volatility and short term markets swings while traders decide what risk appetite looks like."

In corporate news, Big Lots was sharply lower in pre-market trade after the retailer's fourth-quarter earnings.