by Claude Chendjou
PARIS (Reuters) – Major European stock markets are expected to fall on Friday, continuing the previous day’s decline following the publication of a disappointing U.S. manufacturing activity indicator, while another key U.S. employment statistic for July will be released later in the afternoon.
According to the first available indications, the Parisian CAC 40 should lose 0.55% at the opening. The Dax in Frankfurt could fall by 0.58%. The FTSE 100 in London, supported by energy stocks in fear of a conflagration in the Middle East after the assassination of the political and military leaders of Hamas, should gain 0.11%. The EuroStoxx 50 index is expected to fall by 0.71% and the Stoxx 600 by 0.49%.
Investors will see the monthly report on U.S. job creation, wages and unemployment at 12:30 GMT. The Reuters consensus forecast is for 175,000 jobs in July after 206,000 in June, an unchanged unemployment rate of 4.1% and a slowdown in wage growth to 3.7% over a year.
If that forecast holds, it would provide some comfort to investors about the long-held assumption of a soft landing for the U.S. economy, as the ISM manufacturing index released Thursday raised concerns that the economic outlook is sharply deteriorating. A gauge of activity in the sector showed it fell to an eight-month low in July amid a decline in new orders.
These data are being scrutinized as the American Federal Reserve (Fed) opened the door on Wednesday to a rate cut in September. The Bank of England (BoE), for its part, did not wait and decided on Thursday to lower its main interest rate by 25 basis points to bring it back to 5.0%. In the eurozone, the market is still anticipating further monetary easing in September.
On the corporate release side, the season continues this Friday with Engie and Chevron in particular, while in new technologies Apple, Amazon, Intel communicated their financial outlooks on Thursday evening. Apple, up around 1% in after-hours trading, returned to growth with iPhone sales that exceeded expectations. Amazon, down 8% in after-hours trading, said for its part that it expected third-quarter sales to be below expectations. Intel, down 20% in after-hours trading, announced its intention to cut jobs and suspend its dividend after forecasting third-quarter sales below expectations.
A WALL STREET
The New York Stock Exchange ended lower on Thursday, after disappointing economic indicators fueled fears that the U.S. economy is slowing more quickly than expected.
The Dow Jones index fell 1.2%, or 494.82 points, to 40,347.97 points.
The broader S&P 500 lost 75.62 points, or 1.4%, to 5,446.68.
The Nasdaq Composite fell by 405.255 points, or 2.3%, to 17,194.145 points.
The markets had opened higher, driven in particular by the encouraging results of Meta Platforms. Wall Street, however, entered negative territory after the publication of the ISM manufacturing activity indicator, which showed a significant weakening of recruitment in the secondary sector.
Nvidia fell more than 6% as the semiconductor sector was hit by quarterly results from Arm Holdings and statements from Qualcomm warning of the impact of trade tensions on its revenue.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index fell 4.98% to 36,226.52 points, heading for its worst session in four years, in the wake of Wall Street and the rise of the yen. The broader Topix fell 5.4% to 2,557.76 points.
The MSCI index of Asia and Pacific stocks (excluding Japan) lost 0.8%.
In China, the Shanghai SSE Composite fell by 0.37% and the CSI 300 dropped by 0.6%, with the indices being pulled down mainly by finance (-0.55%).
VALUES TO FOLLOW IN EUROPE:]
CHANGES/RATES
The unexpected slowdown in the U.S. manufacturing sector in July is benefiting safe-haven currencies. The Japanese yen rose to 148.51 per dollar on Friday, its highest since mid-March, while the Swiss franc strengthened to 0.8722 against the dollar, its highest since early February.
The euro gained 0.05% to $1.0796 and the pound sterling traded at $1.2725 (-0.11%) the day after the Bank of England’s decisions.
The yield on 10-year US Treasury bonds fell about a basis point to 3.9662%, after a 14-point plunge the day before, which took it below the psychological threshold of 4% for the first time in six months.
OIL
The oil market rose on Friday but was set to post a fourth straight weekly decline as signs of disappointing growth in global fuel demand outweighed fears of supply disruptions.
In the morning, Brent rose by 0.65% to $80.04 per barrel and American light crude (West Texas Intermediate, WTI) by 0.72% to $76.86.
Both oil benchmarks have fallen about 7.3% over the past four weeks, the longest streak of consecutive weekly declines since the start of the year.
MAIN ECONOMIC INDICATORS ON THE AGENDA FOR AUGUST 2:
COUNTRY GMT INDICATOR PERIOD CONSENSUS PREVIOUS
FR 06:45 Industrial production June +1.0% -2.1%
US 12:30 New jobs Jul 175,000 206,000
non-agricultural
Wage growth (over +3.7% +3.9%
a year)
Unemployment rate 4.1% 4.1%
(Written by Claude Chendjou, edited by Blandine Hénault)
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