EUROPEAN STOCK EXCHANGES EXPECTED WITHOUT CLEAR TREND
PARIS (Reuters) – The main European stock markets are expected without a clear trend on Friday before the publication of monthly employment figures in the United States, which will be evaluated according to fears that a forced march in interest rates will cause a recession.
Index futures suggest a drop of 0.06% for the Dax in Frankfurt and 0.33% for the FTSE 100 in London, more exposed to the decline in commodity prices, but virtual stability for the EuroStoxx 50. As for the CAC 40 in Paris, it is heading towards an opening up very slightly according to the first indications available.
The Paris market rose by 1.28% over the first four sessions of the week and the broad European Stoxx 600 index by 1.94%, benefiting from renewed investor appetite for risky assets thanks to a fall in the prices of oil and other raw materials as well as a decline in fears of a deterioration in the economy.
On Thursday, the day after the publication of “minutes” from the Fed suggesting that rate hikes could slow in the event of an impact on economic growth, Christopher Waller, governor of the institution, said that fears of a recession seemed exaggerated to him and he pleaded for a rate hike of only 50 basis points in September.
As for James Bullard, the president of the Fed of St Louis, he estimated that the American economy had “a good chance” of achieving a soft landing.
The markets are therefore now awaiting the monthly report from the Department of Labor to judge the reliability of these forecasts: the Refinitiv consensus expects a slowdown in job creations in June to 268,000 after 390,000 in the first estimate a month earlier but on stability. the unemployment rate to 3.6%.
“Greater job creation would bolster expectations of an even more aggressive monetary policy stance from the Fed,” said Carol Kong, strategist at Commonwealth Bank of Australia.
AT WALL STREET
The New York Stock Exchange ended sharply higher on Thursday and the Standard & Poor’s 500 index and the Nasdaq recorded their fourth consecutive rise, as investors continued to return to equities after statements deemed reassuring on the Reserve’s policy federal.
The Dow Jones gained 1.12%, or 346.87 points, to 31,384.55, the S&P-500 gained 57.54 points, or 1.50%, to 3,902.62, and the Nasdaq Composite advanced 259.49 points (+ 2.28%) at 11,621.35.
Semiconductor stocks benefited from Samsung Electronics’ announcement of its best second-quarter profit since 2018, driven by strong chip sales: Intel gained 3.11%, Nvidia 4.81% and Qualcomm 5, 78%.
Futures so far suggest an open down about 0.4%.
On the Tokyo Stock Exchange, the Nikkei index gained 0.63% less than an hour from the close even if it reduced its gains after the announcement of the hospitalization of ex-Prime Minister Shinzo Abe, shot and seriously injured while speaking in public in western Japan.
In China, the Shanghai SSE Composite gained 0.11% and the CSI 300 0.13%, still buoyed by hopes of new stimulus measures even though they remained down over the week.
The dollar is down slightly against a benchmark basket but the euro continues to fall towards parity, at 1.0149 (-0.10%).
The single European currency is currently down more than 2.6% since the start of the week, its worst weekly performance since early March.
The yen benefited from precautionary purchases in the minutes following the announcement of the attack on Shinzo Abe: it gained 0.29% against the greenback.
Yields on US government bonds fell slightly after the sharp rise recorded on Thursday before the employment figures: the ten-year, after rising to more than 3.01% in session, returned to 2.9909% and the two years falls back to 3.0099% after a peak at 3.061%.
The two- to ten-year segment of the yield curve therefore remains inverted, a sign that a majority of investors expect a recession within two years.
On the downside at the start of the day after a rebound of more than 4% on Thursday, the oil market started to rise again, a sign that tensions on supply remain very present in the face of fears of recession.
Brent gained 0.76% to 105.45 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.32% to 103.06 dollars.
They are nevertheless heading for a drop of around 5% over the week as a whole.
(Written by Marc Angrand)