by Laetitia Volga

PARIS (Reuters) – The main European stock markets are expected to be unchanged at the opening on Friday, new warnings about the deterioration of the American economic situation urging investors to be cautious.

The first indications available give an increase of 0.12% for the CAC 40 in Paris and for the EuroStoxx 50, 0.04% for the FTSE in London and a decline of 0.06% for the Dax in Frankfurt.

The Parisian market and the Stoxx 600 are heading for a fifth consecutive upward session, but the buying trend is weaker this weekend.

US statistics released on Thursday only heightened fears of an upcoming recession in the world’s leading economy: The Conference Board’s leading economic index fell to its lowest since November 2020, home resales are heading back down in March, the Philly Fed activity index plunged to its lowest level in nearly three years and jobless claims rose slightly.

“We think the United States will enter a recession around the middle of the year,” said Joseph Capurso, head of international economics at Commonwealth Bank of Australia. “But the problem for the Federal Reserve is the still high level of inflation. It will still have to raise its rates at least once more.”

AT WALL STREET

Major U.S. stock indexes ended lower on Thursday after disappointing quarterly results from companies such as Tesla and AT&T.

The Dow Jones index fell 0.33% to 33,786.62 points, the S&P-500 lost 0.60% to 4,129.79 points and the Nasdaq Composite fell 0.80% to 12,059.56 points.

The S&P 500’s rebound at the start of the year should be tested by the publication of first quarter results, which investors expect to be lackluster. So far, analysts are forecasting a nearly 5% year-on-year drop in earnings for companies in the index, according to data from Refinitiv.

Tesla fell 9.7% after posting its lowest quarterly gross margin in two years and said it would continue to cut prices. Mobile operator AT&T fell 10.4% after reporting revenue and free cash flow below expectations.

Investors are also looking to determine the future path of interest rates, as many expect the Fed to maintain tight monetary policy for longer than expected.

IN ASIA

The Nikkei index is down slightly (-0.33%) ahead of the Bank of Japan’s monetary policy meeting next week, during which some market participants expect it to change its control policy of the yield curve.

Headline inflation held steady at 3.1% year on year in March, still above the central bank’s target, and excluding energy and fresh food prices, CPI index accelerated to 3.8%, its fastest pace since 1981.

In China, equity markets are falling, weighed down by the fragility of the country’s economic recovery and by the decline in artificial intelligence stocks, for which investor enthusiasm seems to be waning.

The CSI 300 index lost 1.19% and the Shanghai SSE Composite 1.23%.

RATES/EXCHANGES

Yields on Treasuries are still on the rise in Asian trading after disappointing data released the day before in the United States.

The ten-year is displayed at 3.5242% and the two-year at 4.1284%.

The dollar is unchanged against the other major world currencies and the euro remains below 1.1 dollar.

OIL

The oil market is nearly flat as disappointing US economic data and rising US gasoline inventories raise concerns of a recession and slowing global demand.

Brent fell 0.1% to 81.02 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.1% to 77.29 dollars.

(Laetitia Volga, edited by Blandine Hénault)

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