(Updated with stock index futures in Europe, bond market open in Europe and close in Tokyo and German inflation)

by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected to rebound slightly on Friday for the last session of a week dominated by the return of geopolitical, inflationary and economic risk as all eyes are now on the announcements of the major central banks.

According to the first indications available, the Parisian CAC 40 should rebound by 0.41% at the opening, the Dax in Frankfurt by 0.41% and the FTSE 100 in London by 0.19%. The EuroStoxx 50 index is expected to rise by 0.52%.

The pan-European STOXX 600 index for its part recorded Thursday a seventh consecutive session in the red, its worst series since February 2018.

Pending the decisions of the monetary policy meeting of the European Central Bank (ECB) next week, then those of the American Federal Reserve (Fed) on September 20, the bond compartment should continue to weigh on equities. On Wednesday, the European new technologies index (-2.0%) posted its biggest daily drop in two weeks.

It was partly weighed down by Apple following a report of restrictions on iPhone purchases in China.

“China’s partial ban on Apple products has put the trade wars and dispute between the United States and China back on the agenda,” said Capital.com analyst Kyle Rodda.

“The ban is limited in scope…however, it illustrates the bilateral costs and risks of the dispute,” he added.

Added to this is the fact that the money markets are betting more and more on continued monetary tightening. In the Eurozone, an ECB rate hike of 25 basis points is expected this month, while the door remains open for a further hike in November.

The rise in consumer prices in Germany, the largest economy in the euro zone, was confirmed on Friday at 6.4% year on year in August.

In the United States, observers do not expect a rate cut before June 2024 while inflationary pressures on the latest macroeconomic data remain persistent.

AT WALL STREET

The New York Stock Exchange ended in disarray on Thursday, the surprise drop in weekly jobless claims in the United States having revived concerns about interest rates and inflation.

The Dow Jones Industrial Average gained 0.17%, or 57.54 points, to 34,500.73 points.

The broader S&P-500 fell 14.34 points, or 0.32%, to 4,451.14 points.

The Nasdaq Composite fell for its part by 123.64 points (-0.89%) to 13,748.83 points.

The US Department of Labor released a report on Thursday showing an unexpected drop in the number of weekly jobless claims, raising fears that interest rates will stay high for longer than expected.

“Weekly (unemployed) claims were the big news of the morning, with good news being interpreted as bad news and it’s hard to ignore the news coming out of China,” said Sahak Manuelian, director of trading at Wedbush Securities.

Apple shares ended down 2.9% after already losing 3.6% on Wednesday.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index fell 1.16% to 32,606.84 points and the broader Topix fell 1.02% to 2,359.02 points at the close.

The MSCI index comprising stocks from Asia and the Pacific (excluding Japan) fell by 0.2%, yielding at this stage over the whole of the week 1.4%.

In China, the Shanghai SSE Composite lost 0.11% and the CSI 300 lost 0.22%.

CHANGES

The dollar fell (-0.24%) against a basket of benchmark currencies but remained close to its six-month peak hit the day before, at 105.15 points.

Over the week as a whole, the greenback should end on a positive note (+0.6%), recording its longest series of weekly increases since 2014, the eighth in a row.

On the other hand, the euro is about to show an eighth consecutive weekly session of decline after falling Thursday to a low of three months, at 1.0686 dollars. The single European currency appears Friday at 1.0722 dollars (+0.21%).

RATE

The yield on ten-year U.S. Treasuries fell about four basis points to 4.2166%, but it retains a gain of more than five points for the week as a whole as several Fed officials continue to speak before the period of silence linked to the meeting of the American central bank.

The yield of the ten-year German Bund fell four basis points to 2.573%, the easing movement on rates that began on Thursday seemed to be confirmed after the peak at 2.664% reached in the week.

OIL

The oil market is affected by the strength of the dollar and concerns about the slowdown in the Chinese economy which take precedence over the decision of Russia and Saudi Arabia to make new cuts in their production.

Brent fell 0.36% to 89.60 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.48% to 86.45 dollars.

(Written by Claude Chendjou, edited by Tangi Salaün)

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