by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to show little change at the opening on Friday, while European stock markets move on weak mid-session variations, investors taking their gains after an almost continuous week of increases and before the first results of the major US banks.
Index futures on Wall Street are signaling a 0.14% rise for the Dow Jones, a 0.04% drop for the Standard & Poor’s 500 and a 0.07% drop for the Nasdaq.
In Paris, the CAC 40 advanced by 0.26% to 7,389.17 points around 10:30 GMT. In Frankfurt, the Dax fell by 0.32%, penalized in particular by Siemens Energy and BASF. In London, the FTSE takes 0.16%.
The pan-European FTSEurofirst 300 index gained 0.06%, the EuroStoxx 50 in the euro zone rose by 0.16% and the Stoxx 600 by 0.03%.
Over the week as a whole, the CAC 40 has gained 3.94% at this stage and the Stoxx 600 3.09%, its best weekly performance since the end of March.
Equity markets were supported this week by easing inflationary pressures in the United States as evidenced by consumer price (CPI) and producer price (PPI) data for the month of June, which fuels the prospect of an imminent end to monetary tightening by the Federal Reserve (Fed).
The market wants to believe that the Fed will take a long pause in raising rates after the 25 basis point hike in the cost of credit scheduled for June 24th.
“There is a global sigh of relief that US inflation is under control, which is improving (market) sentiment. However, if you look at UK inflation figures, the battle the Bank of England’s fight against inflation is not the same as that of the Federal Reserve,” said Giles Coghlan, market analyst at HYCM.
“(The ECB) is somewhere in between these two (central banks). Short-term interest rate markets for the ECB see maybe one, maybe two more interest rate hikes this year” , he added.
In a sign of the disparities in the fight against inflation led by central banks, in Sweden, consumer prices published on Friday came out in June above expectations, increasing pressure on the Riksbank to tighten its monetary policy .
In addition to macroeconomic concerns, investors are also interested in early corporate results for the second quarter.
Before the publications in the afternoon of the major American banks (JPMorgan, Citi and Wells Fargo) several European groups communicated their financial accounts in the morning.
VALUES IN EUROPE
Telecom equipment manufacturers Nokia (-8.43%) and Ericsson (-7.75%) disappointed. The Finnish group lowered its annual forecast, while its Swedish competitor posted a quarterly profit down 62%.
In luxury, Burberry, the first major group in the sector to publish, left investors unmoved (-0.33%), despite an increase in its quarterly turnover. Interactive Investor highlighted the group’s unsurprising pace of growth and uncertainties in some key regions. Burberry’s sales also fell in the United States.
At the top of the CAC 40, its competitors LVMH and Hermès advance respectively by 1.49% and 1.37%.
On the SBF 120, Vallourec climbed 4.74% after raising its outlook, signing the best performance of the index.
WALL STREET VALUES TO FOLLOW
On the bond market, the yield on ten-year US Treasury bills tightened slightly, by about three basis points, to 3.7871%. The day before, it had lost about ten basis points, the lowest since June 29, in reaction to the publication of monthly producer prices in the United States.
In the eurozone, the yield on the German Bund of the same maturity, the benchmark for the entire block, was stable at 2.449%.
The dollar index (+0.14%), close to a 15-month low against a basket of reference currencies, due to expectations of the end of the rate hike in the United States, heading for its biggest weekly decline since November.
The greenback’s recent depreciation helped the euro hit a 16-month high of $1.1243 before paring gains to $1.1217 (-0.06%).
Oil prices, back above $81 for Brent, were stable at mid-session but heading for a third straight week of gains, the first since April. They are benefiting from strong demand in the United States and production problems in Libya and Nigeria.
Brent fell 0.09% to 81.29 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.08% to 76.82 dollars.
(Written by Claude Chendjou)
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