by Laetitia Volga

PARIS (Reuters) – Major European stock markets are expected to open close to balance on Friday as investors appear to be taking a breather after a week marked by decisions from several central banks.

The first indications available give an increase of 0.04% for the Parisian CAC 40, 0.09% for the Dax in Frankfurt, 0.05% for the FTSE in London and 0.07% for the EuroStoxx 50 .

Capping off a rich week in monetary news, the Bank of Japan unsurprisingly left monetary policy unchanged despite stronger-than-expected inflation, with the institution anticipating a slowdown in price growth later in the year.

The BoJ remains an exception among the major economies when the other issuing institutes committed to raising their rates more or less a year ago. The European Central Bank decided on Thursday to continue on this path by raising its three key rates by a quarter of a point, its president even adding that another increase was very likely in July.

The Federal Reserve is taking a break, but only to give itself time to assess the impact of its policy on the economy before resuming the rise in its rates during the course of the year.

While the Fed has clearly paved the way for more hikes – possibly two – some investors are hoping it won’t be so aggressive, as a series of U.S. statistics released on Thursday signaled resistance in activity and reduced inflationary pressures.

AT WALL STREET

On Wall Street, the S&P 500 and the Nasdaq Composite hit 14-month highs in session and the Dow Jones a six-month high, on hopes that US central bank rates are near their peak.

Retail sales in the United States posted an unexpected increase in May, weekly jobless claims remained stable and import prices recorded their largest annual decline in three years last month.

The Dow Jones Index gained 1.26%, or 428.73 points, to 34,408.06 points, the S&P-500 gained 1.22% to end at 4,425.84 points and the Nasdaq Composite advanced 156, 34 points (+1.15%) to 13,782.82 points.

Yields on US Treasuries fell, pushing growth stocks that are most sensitive to rate changes higher. Apple (1.12%) recorded a high in the session, as well as Microsoft (3.19%) whose capitalization reached 2.590 billion dollars.

IN ASIA

The Nikkei in Tokyo (+0.25%) erased its losses after the BoJ’s ultra-accommodating policy was maintained, unsurprisingly.

China’s main indices are buoyed by hopes that further stimulus will follow the rate cuts decided this week by the People’s Bank of China. The CSI 300 index gained 0.44% and the Shanghai SSE Composite 0.31%.

EXCHANGES/RATES

The dollar is up slightly against other major currencies (+0.13%), including the euro, stable at 1.0941, after rising 1% on Thursday in response to announcements deemed “hawkish” by the ECB.

“The biggest surprise has been the upward revision of inflation forecasts for 2024 and especially for 2025,” said Deutsche Bank economists. “Our central scenario is a final hike of 25 basis points in July to reach a terminal deposit rate of 3.75%. The risks remain clearly on the upside.”

As for government bonds, the yield on ten-year US Treasury bonds varies little at 3.7381%.

OIL

Oil prices fell slightly following a marked increase, sparked by renewed optimism about Chinese demand.

Brent fell 0.29% to 75.45 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.3% to 70.41 dollars. They had gained about 3% on Thursday.

(Edited by Nicolas Delame Bertrand Boucey)

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