MARKET WRAPS

Stocks:

European shares were down Friday while oil rose in early trade as concerns over supply disruptions in the Middle East increased and ahead of key U.S. jobs data.

Oil prices were on track for their largest weekly gain since mid-July. Vice President JD Vance told a press briefing that the conflict isn't a war, but his comments did little to cool markets as Brent crude nudged higher to trade close to $96 a barrel.

"The market is entering a delicate adaptation phase," ANZ said. "Elevated inventories helped absorb the initial supply crisis, but the challenge is now to keep the market balanced as those buffers diminish."

Investors awaited August U.S. employment data at 1230 GMT, a key input ahead of the Federal Reserve's interest-rate decision on Sept. 16.

A strong jobs reading could revive expectations for a Fed rate hike, while weak data could increase prospects of unchanged rates.

Meanwhile, Friday's eurozone economic data calendar is empty. The focus, however, will gradually turn to the European Central Bank's meeting on Sept. 10, where a 25-basis-point rate hike is fully priced, according to LSEG.

BNP said two developments reinforce the case for a hike this month. The first argument is the duration of the Middle East conflict and the broadening of energy price pressures.

"Indeed, while significant uncertainty persists, there appears to be little sign of an imminent resolution to the conflict," it said. The second development supporting another hike in September is the resilience of the economy, BNP added.

U.S. Markets:

Stock futures were mixed Friday as investors attention turned to key U.S. nonfarm payrolls data due today.

Investors will also position for a long weekend, with U.S. trading floors closing for Labor Day on Monday.

Forex:

The dollar rose slightly after dropping significantly on Thursday following comments from Fed Governor Christopher Waller, who said he would support holding interest rates steady if inflation data backed this up.

Bonds:

Eurozone government bond yields rose slightly after dropping the previous session as investors await fresh impulse from U.S. employment data today.

German 10-year Bund yields require a pronounced improvement in the Middle East, which could allow energy prices to decline, to return to SEB's target range below the current levels, SEB said.

According to Societe Generale, the coming 2027 budget negotiations will be a key risk across the eurozone government bond [EGB] universe, potentially refocusing investor attention on fiscal consolidation challenges.

Treasury yields were little changed in early trade, with minor increases in the short end and small declines on the long end, as markets remain calm ahead of the August employment report.

Energy:

In early European trading, Brent crude ticked 0.2% higher, while WTI futures rose 0.3%. The benchmarks are up 8.6% and 9.8% on the week, respectively.

Metals:

Gold prices fell in early European trading, but held above $4,500 a troy ounce as investors await the release of key U.S. payrolls data for clues on the Federal Reserve's next move.

Iron ore

Iron ore prices were higher in early trade. Prices are likely to stay range-bound in the near term, Baocheng Futures said.

EMEA HEADLINES

Norway's Massive Oil Fund Proposes Cut to Government Bond Holdings

The manager of Norway's $2.4 trillion sovereign-wealth fund proposed cutting its holdings of government bonds to add riskier debt in a bid to seek greater returns.

Norges Bank Investment Management-the arm of the central bank that manages the world's largest sovereign-wealth fund, commonly known as the oil fund-said in a letter to Norway's finance ministry that the portion of its bond portfolio allocated to government debt should be cut to 50% from 70%.

German Manufacturing Recovery Continues as Orders Climb for Third Straight Month

Manufacturing orders in Germany climbed again in July, another signal of the country's tentative industrial recovery that is defying the impact of surging energy prices as the conflict in the Middle East persists.

Factory orders in the eurozone's largest economy rose 2.5% on month, following an upwardly revised 3.7% rise in June, data agency Destatis said Friday. A consensus of economists polled last week by The Wall Street Journal had expected a small fall of 0.1%.

Volkswagen Board Approves Doubling Job Cuts to 100,000 in Surprise Move

Volkswagen's supervisory board has approved a plan to double job losses at the automaker to 100,000 and halve its model portfolio as it contends with President Trump's tariffs and intensifying competition from Chinese automakers.

In a surprise move, the company's often-fractious supervisory board unanimously approved Chief Executive Oliver Blume's radical restructuring package, called Future Plan 2030.

Ukraine's Next Goal Is to Shut Down Russia's Commercial Airspace

Ukraine is planning to step up the presence of its drones near Russian airports to compel their closure, while warning international airlines to re-evaluate the safety of flying there, as part of its effort to disrupt Russia's economy and pressure Moscow to end the war.

Ukrainian President Volodymyr Zelensky cautioned airlines and their insurers on Tuesday that Russian airspace "is becoming completely unsafe." Behind his comments, the Ukrainian military said, is a plan to put so many drones in the air near Russian airports that the temporary closures-already increasingly common-become a complete shutdown.

GLOBAL NEWS

Norway's Massive Oil Fund Proposes Cut to Government Bond Holdings

The manager of Norway's $2.4 trillion sovereign-wealth fund proposed cutting its holdings of government bonds to add riskier debt in a bid to seek greater returns.

Norges Bank Investment Management-the arm of the central bank that manages the world's largest sovereign-wealth fund, commonly known as the oil fund-said in a letter to Norway's finance ministry that the portion of its bond portfolio allocated to government debt should be cut to 50% from 70%.

Japan Finance Minister Vows to Keep Eye on Fiscal Balance

TOKYO-Japan will continue to seek a balance between fiscal sustainability and economic growth, the country's finance minister said, even as ministries submitted record budget requests of nearly $918 billion.

Finance Minister Satsuki Katayama said the 143 trillion yen sum, equivalent to $917.85 billion, aligns with Prime Minister Sanae Takaichi's push to reduce dependence on supplementary budgets. Combined, the fiscal 2025 supplementary budget and this year's regular spending came to about -Yen141 trillion, meaning that the ministries' requests represent an increase of about -Yen2.5 trillion.

Fed's Waller Hints at September Rate Pause-If August Inflation Plays Along

Federal Reserve Gov. Christopher Waller said Thursday that August inflation data will heavily guide his decision on whether to raise or keep interest rates steady at the upcoming September meeting. But he laid out a compelling case for why cooling inflation could keep him on hold.

In prepared remarks for an event in Washington, D.C. on Thursday, Waller said that while inflation is still "meaningfully" above the Fed's 2% target, he's seeing signs of cooling in recent data. That could push him to vote to keep rates steady at the Federal Open Market Committee meeting that takes place Sept. 15-16.

Ukraine's Next Goal Is to Shut Down Russia's Commercial Airspace

Ukraine is planning to step up the presence of its drones near Russian airports to compel their closure, while warning international airlines to re-evaluate the safety of flying there, as part of its effort to disrupt Russia's economy and pressure Moscow to end the war.

Ukrainian President Volodymyr Zelensky cautioned airlines and their insurers on Tuesday that Russian airspace "is becoming completely unsafe." Behind his comments, the Ukrainian military said, is a plan to put so many drones in the air near Russian airports that the temporary closures-already increasingly common-become a complete shutdown.

Trump Administration Again Asks Supreme Court to Allow New Mail Voting Rules

WASHINGTON-The Trump administration's bid to deploy the U.S. Postal Service to regulate mail-in ballots is back at the Supreme Court for the second time in as many weeks.

In an emergency appeal on Thursday, the administration asked the high court to allow it to immediately implement proposed rules that would require states to hand over voter data and would give the Postal Service power to reject mail ballots that don't comply with new conditions.

Argentina's Milei Battles Falling Ratings by Reviving Claim to the Falklands

With his poll numbers sinking, Argentina President Javier Milei is increasingly playing a long-trusted nationalist card: the country's claim on the Falkland Islands, which Britain controls off the coast of the South American nation.

"The islands are ours, they were taken from us, and they are indispensable for Argentina in the coming decades," Milei said Thursday in a national address. "Argentina won't stand by with its arms crossed."

Trump Names Adam Telle Acting Army Secretary After Driscoll Resignation

President Trump named Adam Telle as acting Army secretary, succeeding Dan Driscoll, who resigned earlier this week after months of tension with Defense Secretary Pete Hegseth.

Trump said Telle, assistant secretary of the Army for civil works, would start in his new job immediately. "He is a Great Patriot, who is respected by all," Trump said Thursday evening on Truth Social.

Write to priscila.barrera@wsj.com