PARIS (Reuters) – The main European stock markets are expected to fall at the opening on Friday, after restrictive comments from the President of the Federal Reserve, Jerome Powell, in a wait-and-see context.
Futures contracts suggest an opening down 0.67% for the Parisian CAC 40, compared to 0.56% for the FTSE in London, 0.47% for the Dax in Frankfurt, and 0.52% for the EuroStoxx 50.
The Fed “is committed to reaching a sufficiently restrictive monetary policy position to bring inflation back (towards the objective of) 2%”, declared Jerome Powell. “We are not convinced that we have achieved this position.”
“If it is appropriate to further tighten our policy, we will not hesitate to do so,” added the president of the Fed during a conference organized by the International Monetary Fund (IMF).
The resistance of the American economy to rate increases raises doubts about the impact of monetary policy and Fed officials seek to temper market optimism, which contributes to reducing the transmission of their decisions on activity in loosening financial conditions.
“It is clear that the Fed wants to maintain a restrictive impulse, which is logical because any suspicion of neutrality would push the market to reassess the rate trajectory downwards,” note ING strategists.
A $24 billion issue of U.S. Treasuries also performed poorly on Thursday and weak demand pushed sovereign yields higher, putting pressure on risky assets.
Investors finally remain cautious ahead of several important publications in the coming days.
In the euro zone, the President of the European Central Bank, Christine Lagarde, will speak this Friday at 12:30 GMT while several indicators are expected next week, including GDP and inflation in the euro zone, Tuesday and Friday, and inflation in the United States, Tuesday.
VALUES TO FOLLOW:
A WALL STREET
The New York Stock Exchange ended lower on Thursday, after comments from US Federal Reserve Chairman Jerome Powell and as Treasury yields rose.
The Dow Jones index fell 0.65%, or 220.33 points, to 33,891.94 points. The broader S&P-500 lost 35.43 points, or 0.81%, to 4,347.35 points. The Nasdaq Composite .IXIC fell 128.97 points (0.94%) to 13,521.45 points.
IN ASIA
The Tokyo Stock Exchange ended down on Friday, in the wake of Wall Street after comments considered restrictive by Jerome Powell, and disappointing results. The Nikkei index lost 0.24% to 32,568.11 points and the broader Topix lost 0.08% to 2,337.10 points.
Several technology stocks declined after disappointing results, including the Sony group which lost 2.04%.
Chinese indices are falling in the absence of new measures to support the economy. The Shanghai SSE Composite lost 0.47%, the CSI 300 0.73%, the Hong Kong Hang Seng index 1.58%.
RATE
US yields fell slightly after jumping on Thursday, driven by comments from Jerome Powell and an issue of 30-year securities that met weak demand.
The ten-year Treasury yield fell 1.4 basis points to 4.6201%, while the two-year rate was stable at 5.0222%.
The yield on the German ten-year rate rose by 4.7 bp to 2.701%, while that of the two-year rate increased by 1.8 bp to 3.107%.
CHANGES
Foreign exchange markets are stable after being shaken by Jerome Powell’s comments, which benefited the dollar.
The greenback is holding up against a basket of reference currencies, while the euro remains at $1.0662 and the pound sterling at $1.2219.
In Asia, the yen is unchanged at 151.42 yen per dollar, while the Australian dollar lost 0.11% to 0.6358 dollars.
OIL
Oil is up slightly but is nevertheless heading for its third consecutive weekly decline, as concerns about the conflict in the Middle East have given way to questions about demand.
Brent advanced 0.47% to $80.39 per barrel, with American light crude (West Texas Intermediate, WTI) gaining 0.37% to $76.02.
MAIN ECONOMIC INDICATOR ON THE AGENDA FOR NOVEMBER 10
COUNTRY GMT INDICATOR PERIOD PREVIOUS CONSENSUS
USA 3:00 p.m. Confidence index for Nov. 63.7 63.8
Michigan (1st estimate)
(Written by Corentin Chappron, edited by Bertrand Boucey and Kate Entringer)
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