US pre-open: Stocks to rise on debt ceiling deal, ahead of payrolls

US stock futures pointed to an upbeat open on Friday after the Senate passed a bi-partisan agreement to raise the debt ceiling, and as investors eyed the latest non-farm payrolls report.

At 1120 BST, Dow Jones Industrial Average, S&P 500 and Nasdaq futures were all up 0.5%.

Oanda market analyst Craig Erlam said:"A debt ceiling fiasco has been averted late in the day and markets are ending the week on a positive note, as traders turn their attention to the US jobs report.

"Rarely do you have a situation in which everyone appears to be in agreement but we've seen over the last few weeks that no one at any stage thought a US default was a realistic possibility. Brinkmanship in Washington is part of the theatre of the negotiation but the idea that Congress would ever intentionally allow the US to default is ridiculous.

"Still, there does seem to be some sense of relief in the markets that any risks, however minuscule, have been cast aside leaving investors to focus on what really matters at this stage; inflation, interest rates, and the economy."

The payrolls report for May is due at 1330 BST, along with the unemployment rate and average earnings.

Erlam said: "The US jobs report was always the main event this week and depending on the numbers, we may well see that play out in the markets. We're hearing some positive noises from the Fed in recent days around the prospect of a pause in order to allow more time for the data to moderate and be fully analysed but even so, another red hot jobs report today may be impossible to ignore.

"For the Fed to feel confident that inflation is heading back to 2% and sustainably, we need to see some weakness in the labour market. That means much fewer new jobs for a period, more modest wage growth, and in all likelihood a slight increase in unemployment. Higher participation wouldn't hurt either.

"We're not going to get all that today but an NFP closer to 100,000 and wage growth of 0.3% or lower may give policymakers the confidence to pause in two weeks, assuming the inflation data the day before doesn't bring any further nasty surprises."

In equity markets, Lululemon surged nearly 15% in pre-market trade after lifting its full-year outlook on Thursday.

Cybersecurity firm SentinelOne tumbled more than 30%, however, as it slashed its full-year guidance and announced plans for job cuts.