PARIS (Reuters) – Wall Street is expected to be hesitant on Friday as earnings season begins, while European markets are up mid-session, welcoming a decline in U.S. inflation.
New York index futures suggest a mixed opening for Wall Street, with the Dow Jones, Standard & Poor’s 500 and Nasdaq showing no clear direction.
In Paris, the CAC 40 rose 0.72% to 7,681.88 points at around 11:40 GMT. The Dax in Frankfurt gained 0.39%, compared to 0.28% for the FTSE in London.
The pan-European FTSEurofirst 300 index rose 0.4%, compared to 0.6% for the EuroStoxx 50 and 0.38% for the Stoxx 600.
Markets are rising after the latest US inflation figures, which raised hopes that the Federal Reserve will ease its monetary policy this year.
CPI inflation thus surprised on the downside, while the services component, the main reason for the persistence of inflation across the Atlantic, is starting to slow.
“Inflation in the housing sector appears to have slowed, but more volatile categories, such as travel services and auto prices, could see their pace of decline slow, while rising shipping costs could lead to higher prices for goods,” qualify the economists at Pimco, who nevertheless still expect a rate cut in September.
June producer prices, due at 1230 GMT, will help markets gauge whether inflationary pressures are dissipating across the economy.
While the macroeconomic calendar will be light next week, investors are also paying attention to the results of American and European companies.
In the United States, the pace of growth in earnings per share (EPS) is expected to slow in the second quarter after a very solid first quarter.
The figures published Friday by JPMorgan and Wells Fargo disappointed Wall Street and should cause the markets to react at the opening.
On the Stoxx 600 side, expected twelve-month EPS reached new records, which BofA strategists explained by “better than expected figures in the first quarter”.
“A strong second-quarter earnings season could provide further support to EPS momentum, but this could give way to further downgrades as global growth momentum weakens,” analysts nevertheless warn.
VALUES TO FOLLOW ON WALL STREET
JPMorgan Chase’s profit rose in the second quarter, helped by its investment bank and an $8 billion accounting gain from a stock-swap deal with Visa.
VALUES TO FOLLOW IN EUROPE
Ericsson reported a smaller-than-expected drop in second-quarter revenue on Friday, up 2.44 percent.
Norwegian Air reported a better-than-expected quarterly profit on Friday, up 5.298%.
Addtech climbs 13.15% to a record high after reporting higher than first-quarter profit and providing guidance for future quarters.
EMS Chemie fell 3.69% after the Swiss nylon maker lowered its 2024 revenue forecast.
Axfood fell 8.41%, at the bottom of the Stoxx 600, its quarterly profit having suffered from operational disruptions and the restructuring of its logistics.
RATE
Yields are rebounding on profit-taking as the latest inflation data sent sovereign yields sharply lower on Thursday.
The 10-year Treasury yield rose 2.3 bps to 4.2158%, while the two-year rate was stable at 4.5124%.
The yield on the German ten-year rose 3.6 bp to 2.507%, while that of the two-year rate climbed 2.9 to 2.829%.
CHANGES
The dollar continued its decline triggered by Thursday’s inflation figures, with investors believing that the interest rate gap with the rest of the world, and Britain in particular, should narrow more quickly than expected.
The dollar declined 0.13% against a basket of benchmark currencies, while the euro gained 0.22% to $1.0889, and the pound sterling gained 0.39% to $1.2959.
OIL
Crude is rising after the latest US inflation figures, which raise hopes of an imminent Fed rate cut that would support demand.
Brent rose 0.55% to $85.87 per barrel, while US light crude (West Texas Intermediate, WTI) strengthened 0.81% to $83.29.
MAIN ECONOMIC INDICATORS ON THE AGENDA FOR JULY 12:
COUNTRY GMT INDICATOR PERIOD CONSENSUS PREVIOUS
US 12:30 Producer prices June 2.3% 2.2%
US 2:00 PM Jul Sentiment Indicator 68.5 68.2
Michigan (preliminary)
(Written by Corentin Chappron, edited by)
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