PARIS (Reuters) – Wall Street is expected to rise on Friday, while European stock markets hesitate, disappointed by poor corporate results in the United States and remaining cautious ahead of several central bank meetings scheduled for next week.
New York index futures suggest a higher Wall Street open, with the Dow Jones gaining 0.12%, while the Standard & Poor’s 500 rose 0.26% and the Nasdaq 0.47%.
In Paris, the CAC 40 advanced by 0.30% to 7,406.82 points around 10:50 GMT, while the FTSE in London gained 0.10%. The Dax in Frankfurt fell by 0.38%, under pressure from SAP which fell after its poor results.
The pan-European FTSEurofirst 300 index is treading water, like the EuroStoxx 50 and the Stoxx 600.
Earnings from Tesla and Netflix, released earlier in the week, disappointed investors, especially as US tech stocks explained much of the performance of US stocks in 2023.
Moreover, the markets remain cautious ahead of the meeting of the Federal Reserve and the European Central Bank next week.
The trajectory of European rates appears clearer than that of the Fed, and investors will be on the lookout for any hint of a more restrictive stance from the US central bank, as activity data paints an uncertain picture of the strength of the US economy.
In particular, labor markets remain resilient, which could convince the Fed to raise rates again in September, despite decelerating underlying inflation.
“Inflation dynamics are more encouraging and the general feeling is that central banks are close to their rate peak (…) while economies could land softly”, summarize the rate strategists of ING. “The flip side is that this resilience carries potential inflationary risks, and that’s why central banks will be more cautious and risk-free.”
THE VALUES TO FOLLOW IN WALL STREET
The quarterly results of American Express are expected before the opening, like those of the oil services company SLB.
Investors await the rebalancing of the Nasdaq, which will take place at the close on Friday, and is intended to reduce the weight of the largest capitalizations in the index. A handful of very large caps alone were enough to support US indices in 2023.
VALUES TO FOLLOW IN EUROPE
In Paris, Thales is at the bottom of the CAC 40, down 4.21%, analysts believing that the revision of forecasts on exchange rates weighs more than the increase in the prospects for organic growth in annual turnover. Ubisoft posted one of the strongest increases in the SBF 120, up 4.49%, after net bookings exceeded expectations in the first quarter.
Conversely, Dassault Aviation (-6.93%) is the red lantern of the SBF120, sanctioned after the drop in its turnover in the first half.
The “tech” sector, down 0.59%, has at this stage the largest weekly drop on the Stoxx 600, investors having sanctioned SAP, which revised down Thursday its annual outlook for its sales in dematerialized computing (“cloud”), and which gives up 3.97%.
The advance in oil prices, however, benefited the energy sector, which climbed 0.72% to the top of the Stoxx sectors. Wartsila and Schindler are respectively in first (9.54%) and second (7.14%) position of the Stoxx 600, after the publication of better than expected quarterly results.
RATE
Rates are stable on both sides of the Atlantic, with markets remaining on hold ahead of Fed and ECB monetary policy meetings next week.
The ten-year German yield is hovering at 2.453%, like that of the two-year rate, at 3.259%.
The ten-year Treasury yield remains at 3.8487%.
CHANGES
The dollar strengthens before the next meeting of the Fed: the markets estimate likely to 96% a new rate hike next week.
The dollar advanced 0.17% against a basket of benchmark currencies, while the euro remained stable at $1.1124, with the ECB also expected to raise rates next week.
The pound sterling eroded 0.15% to 1.2846 dollars.
OIL
Oil is rising, with the latest data released by India and China showing that both countries imported significant volumes of Russian oil in the first half of the year, indicating that demand is holding up.
Brent crude rose 1.19% to $80.59 a barrel, with US light crude (West Texas Intermediate, WTI) rising 1.26% to $76.6.
(Report Corentin Chapron, edited by Kate Entringer)
Copyright © 2023 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
