File photo: London Stock Exchange, Great Britain
by Claude Shingo
PARIS (Reuters) – Major European stock markets are expected to rise on Friday at the open after two consecutive sessions in red linked to announcements deemed restrictive by the head of the US Federal Reserve that caused severe turmoil. Bond yields and the dollar are rising.
Index futures point to a rise of 0.68% for the CAC 40 in Paris, 0.52% for the Dax in Frankfurt, 0.65% for the FTSE 100 in London and 0.7% for the EuroStoxx 50.
After the Fed’s fourth rate hike by three-quarters of a point, Chairman Jerome Powell said on Wednesday that the peak in interest rates is likely to be higher than what US central bank members estimated in September, marking a pause in monetary tightening. “before it’s time”.
These comments, which have fueled widespread risk aversion in financial markets since Wednesday, now appear to be absorbed by investors. But this trend may be influenced by the US Department of Labor’s monthly employment report, which is scheduled for release at 12:30 GMT. The Reuters consensus expects job creation to decline in October to 200,000, the unemployment rate to rise slightly to 3.6 percent and a slowdown in the rise in the average salary over the year to 4.7 percent.
In Europe, investors will be watching the final figures for eurozone service activity in October, while industrial orders in Germany posted a much bigger-than-expected 4% contraction in September.
Christine Lagarde, President of the European Central Bank (ECB), who is scheduled to speak on Friday as part of a call from the Central Bank of Latvia, could also address the subject of interest rates and fears of economic deflation in the eurozone. While the Bank of England (BoE) for its part announced on Thursday that the cost of credit should not reach the peak expected by the markets, due to the risks of recession.
The rest of the session should be energized by new publications of corporate results including Société Générale and Starbucks.
Societe Generale posted results on Friday that beat expectations in the third quarter, boosted by its trading activities that benefited from market volatility, and indicated that it aims to improve profitability this year.
On Wall Street
The New York Stock Exchange ended lower Thursday for the fourth consecutive session as economic data did little to change investors’ perception that the Federal Reserve should keep raising interest rates for longer than expected.
The Dow Jones Industrial Average fell 0.46%, or 46.51 points, to 3,2001.25 points. The Standard & Poor’s 500 index lost 39.80 points, or 1.06 percent, to 3,719.89 points. The Nasdaq Composite Index fell 181.86 points (-1.73%) to 10,342.94 points.
In Asia
On the Tokyo Stock Exchange, the Nikkei ended with a loss of 1.68% to 27,199.74 points and the broader Topix index fell 1.29% to 1915.4 points.
In China, the Shanghai SSE Composite Index is up 2.43% and the CSI 300 Index is up 3.27%.
the changes
In the currency market, the index, which measures the volatility of the dollar against a record basket, fell 0.27% on Friday after hitting a peak of nearly two weeks the day before, gaining 0.8%.
The euro took the opportunity to rise 0.28% to $0.9778.
The British pound rose again, to $1.1224 (+0.53%), after falling to its lowest level in two weeks on Thursday after the Bank of England warned about the British economy, which is vulnerable to a prolonged recession.
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The yield on the 10-year US Treasury gained nearly four basis points further to 4.16% after rising about seven on Thursday, in reaction to Jerome Powell’s comments. The two years most sensitive to price changes appear at 4.73%, up three points, the highest in 15 years.
In Europe, the yield on German 10-year bonds was practically stable on Friday in early trading, at 2.25%, after gaining more than 11 points on Thursday.
oil
Oil prices are on the rise with the dollar falling: Brent crude rose 1.95% to $96.52 a barrel, and US light sweet crude (West Texas Intermediate, WTI) rose 2.18% to $90.09 a barrel.
(by Claude Chengo, Editing by Jean-Stefan Bruce)
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