PARIS (Reuters) – European markets ended lower on Friday, uncertain about the trajectory of the U.S. economy while political uncertainty remains in France.

In Paris, the CAC 40 lost 0.26% to 7,675.62 points, while the German Dax gained 0.06% and the British Footsie declined by 0.45%.

The EuroStoxx 50 index ended the session down 0.26%, compared to 0.26% for the FTSEurofirst 300 and 0.22% for the Stoxx 600.

Numerous macroeconomic indicators have followed one another in recent days, giving a nuanced picture of activity in the United States.

The employment markets are thus showing signs of a slowdown, whether in terms of job openings, job creations in the private sector or unemployment, which is increasing a little more than expected in June according to the latest monthly employment report.

ISM surveys showed weakening activity in both the industrial and service sectors.

“This report is starting to get closer to the ‘unexpected weakening of the labor market’ that Jerome Powell had mentioned as a possible reason for accelerating the rate cut schedule,” said Bastien Drut, head of strategy and economic studies at CPR AM.

The economist also notes that “the business survey is disappointing” and “the household survey is bad without being catastrophic”.

The British elections also animated discussions across the Channel this week, following the landslide victory of the Labour Party.

The investors’ agenda remains busy, however.

The results of the second round of the French legislative elections could cause European indices to react, with the Stoxx 600 being relatively exposed to France.

However, uncertainties surrounding the trajectory of monetary policies should capture the attention of the markets next week.

Federal Reserve Chairman Jerome Powell will address Congress on Tuesday, while June CPI inflation figures will be released on Thursday.

Separately, the second-quarter earnings season kicks off on Thursday, with results from major U.S. banks, including JPMorgan, due on Friday.

A WALL STREET

Wall Street is hesitant at mid-session, with the latest employment report offering a mixed reading of the US economic situation: inflationary pressures are dissipating but labour markets are weakening.

At the time of the European closing, trading on the New York Stock Exchange indicated a stable Dow Jones, against a rise of 0.3% for the Standard & Poor’s 500 and 0.59% for the Nasdaq Composite.

VALUES

The technology sector is gaining ground after Samsung, the world’s largest maker of memory chips, smartphones and TVs, estimated its second-quarter operating profit would rise more than 15-fold. Large orders from Aixtron are also supporting the sector.

The technology segment grew by 0.66%, Infineon, STMicroelectronics and Soitec gained 2.9%, 2.17% and 4.97% respectively. Aixtron soared by 18.58%.

Eurofins Scientific rose 4.68% after the group issued new denials on Friday to accusations of financial wrongdoing by Muddy Waters.

German battery maker Varta, which is undergoing a restructuring, rose 20.85% after announcing the day before that it had started talks with Porsche about a potential investment in its large-format lithium-ion battery division.

British housebuilders have advanced as investors welcomed the Labour prime minister’s plans for the construction sector. Analysts say Persimmon (2.79%), Taylor Wimpey (2.42%) and Vistry (3.49%) are set to be the biggest beneficiaries of his plan, which aims to increase the supply of affordable housing.

Amplifon fell 6.1% after Equita lowered its outlook on the Italian hearing aid company, citing weaker market momentum.

RATE

Yields are down sharply on both sides of the Atlantic as investors believe the latest jobs figures justify a Fed rate cut this year.

At the close of the rate markets in Europe, the yield on the ten-year Treasury lost 7.3 bp to 4.2745%, compared to 8.5 bp for the two-year rate, at 4.6077%.

The yield on the German ten-year fell by 5.3 bp to 2.532%, while that of the two-year rate dropped by 4.9 bp to 2.894%.

The OAT-Bund spread reached 69bp, down from over 80bp at the height of political uncertainty two weeks ago.

CHANGES

The pound is up sharply after the appointment of a Labour government on Thursday, while the dollar is down slightly after the latest burst of data.

The dollar lost 0.16% against a basket of benchmark currencies, while the euro gained 0.16% to $1.0827. The pound rose 0.4% to $1.2808.

OIL

Crude is advancing and remains near its highest since April and is set for a fourth consecutive weekly gain as markets anticipate a strong rise in demand this summer in the United States.

Brent strengthened by 0.53% to 87.89 dollars per barrel, American light crude (West Texas Intermediate, WTI) rose by 0.66% to 84.43 dollars.

(Written by Corentin Chappron, edited by Sophie Louet)

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