by Claude Chendjou
PARIS (Reuters) – The main European stock markets are expected to rise slightly at the opening on Friday, still supported by hopes of a lull in monetary tightening by central banks but the quarterly publications of the financial accounts of the major Wall Street banks should call for some caution.
Futures contracts on indices suggest an increase of 0.21% for the CAC 40 in Paris, which hit a historic record on Thursday for the third consecutive session. An increase of 0.29% is expected on the Dax in Frankfurt and 0.17% on the FTSE 100 in London. The EuroStoxx 50 could gain 0.21%.
Following in the footsteps of the Bank of Canada (BoC), the Australian central bank and the Bank of South Korea, the Monetary Authority of Singapore (MAS) in turn decided on Friday to observe a pause in the raising interest rates for the first time since April 2021.
The publication of several indicators showing a slowdown in inflation in the United States has fueled hopes in recent sessions of an imminent end to monetary tightening by the Fed.
Futures contracts give with a 68% probability of a 25 basis point Fed rate hike in May and virtually zero probability of further hikes in the cost of credit beyond that date. A rate cut of 50 basis points is even expected at the end of the year, according to the FedWatch barometer.
The start of the corporate earnings season in the United States with the publications of JPMorgan, Citigroup, Wells Fargo and BlackRock could however temper risk appetite.
Analysts expect S&P-500 companies to report quarterly earnings down 5.2% year-on-year, down from 1.4% growth previously expected at the start of the year, according to Refinitiv data.
In Europe, after better-than-expected sales posted by LVMH in the first quarter, Hermès, which also reported quarterly sales above forecasts, is expected by investors.
On the macroeconomic level, the market will be informed at 06:45 GMT of the final consumer prices in France, while in the United States, the monthly data for retail sales and industrial production are scheduled for the afternoon.
AT WALL STREET
The New York Stock Exchange ended sharply higher on Thursday with the hope that the Fed will end its rate hike.
The Dow Jones Industrial Average gained 1.14%, or 383.19 points, to 34,029.69 points.
The broader S&P-500 gained 54.27 points, or 1.33%, to 4,146.22 points.
The Nasdaq Composite advanced for its part by 236.94 points (1.99%) to 12,166.27 points.
In values, Delta Air Lines ended lower, its first quarter profit coming in below analysts’ expectations, while Harley-Davidson was penalized by the departure of its chief financial officer, Gina Goetter, at the end of the month of April.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index rose 1.2% to 28,493.47 points and the broader Topix gained 0.54% to 2,018.72 points at the close. The Japanese market was notably driven by the good results of Fast Retailing, the owner of Uniqlo, which jumped 8.49%.
In China, the Shanghai SSE Composite gained 0.53% and the CSI 300 gained 0.51%.
The MSCI index comprising stocks from Asia and the Pacific (excluding Japan) rose by 0.6%.
EXCHANGES/RATES
The dollar, which fell to a one-year low against a basket of benchmark currencies, fell 0.17%, penalized in particular by the contraction in producer prices in the United States.
The euro was at 1.1068 dollars (+0.22%) after hitting a new high of one year at 1.1075 dollars.
Money markets are pricing in further rate hikes from the European Central Bank (ECB) of at least 50 basis points vs. a pause in the US.
The yield on ten-year US Treasury bonds is almost stable at 3.4355% and that of the German Bund of the same maturity is trading at 2.372%, while the yield difference (spread) between these two bonds has narrowed to around 100 basis points, its lowest level in two years.
OIL
Oil prices are rising on signs of lower Russian production and tighter supply ahead of the International Energy Agency’s (IEA) monthly report later today. will help clarify the outlook for global demand.
Brent gained 0.26% to 86.31 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.35% to 82.45 dollars.
(Written by Claude Chendjou, edited by Matthieu Protard)
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