THE MAIN EUROPEAN STOCK EXCHANGES EXPECTED ON FRIDAY
by Claude Chendjou
PARIS (Reuters) – The main European stock markets, which recorded five sessions in a row in the red linked to worries about inflation and interest rates, are expected to rise on Friday at the opening in the wake of the rebound in the the day before the Dow Jones and the S&P-500 and before the publication of the US Department of Labor’s monthly report on employment, unemployment and wages.
Index futures suggest an increase of 1.3% for the Dax in Frankfurt, 0.69% for the FTSE 100 in London and 1.19% for the EuroStoxx 50.
However, the trend should remain cautious before the publication of the US employment report at 12:00 GMT. Investors have been looking for signs that the US Federal Reserve (Fed) may be changing its strategy since its chairman, Jerome Powell, warned last week that higher interest rates would be sustainable in the face of record inflation.
The Reuters consensus forecasts 300,000 job creations in August after 528,000 the previous month, an unemployment rate unchanged at 3.5% and a slowdown in the increase in the average wage to 0.4% after +0.5% in July .
“The latest data confirms that the labor market remains strong … even with 200,000 to 250,000 jobs, it’s still a very strong labor market to bring down inflation and that just indicates that the Fed still has labor,” said Ronald Temple, head of U.S. equities at Lazard Asset Management.
Markets are now pricing in a 75% chance of a third consecutive Fed rate hike of 75 basis points this month from a 69% chance the day before. They also think these could peak at 3.977% by March 2023.
In Europe, markets have also revised upwards expectations of a rate hike by the European Central Bank (ECB) next week, pricing with a probability of almost 80% on a rise in the cost of credit of three quarters of a point. , while the latest data on manufacturing activity in the region showed a further contraction in August, a sign of an increased risk of recession.
VALUES TO FOLLOW:
AT WALL STREET
The New York Stock Exchange ended in dispersed order Thursday pending the publication of the monthly report on employment in the United States.
The Dow Jones index rose 0.46% to 31,656.42 points, the broader S&P-500 advanced 0.30% to 3,966.85 points, while the Nasdaq Composite fell 0.26% at 11,785.13 points.
On the Tokyo Stock Exchange, the Nikkei index lost 0.1% less than an hour from closing.
In China, the Shanghai SSE Composite gained 0.28%, while the CSI 300 lost 0.22%.
The dollar, which hit a new 20-year high on Thursday against a basket of benchmark currencies, was almost stable on Friday (-0.073%).
However, it continues to rise against the yen at 140.34 (+0.1%) after hitting a 24-year peak the day before.
The euro, up 0.23% to 0.9967 dollars, is still trading below parity with the US currency.
The yield on two-year US Treasuries fell slightly, by 1.5 points, to 3.506% after rising to a 15-year high at 3.551% and that of ten years appeared at 3.257% after closing at 3.265 %.
Bond yields in Europe ended higher on Thursday, benefiting from the revision of expectations of an ECB rate hike next week: that of the ten-year German Bund gained more than three basis points to 1.56%.
Oil prices are rising again on Friday but could record their biggest weekly drop in four weeks for the whole week. They fell about 3% on Thursday due to new health restrictions in China and fears of a deterioration in the global economy.
Brent rose 1.94% to 94.15 dollars a barrel and US light crude (West Texas Intermediate, WTI) 2% to 88.34 dollars a barrel.
(Some data may show a slight shift)
(Written by Claude Chendjou, edited by Matthieu Protard)