PARIS (Reuters) – Wall Street is expected to open lower on Friday, while Europe is down mid-session as investors worry about slowing U.S. labor markets and the technology sector retreats after a string of weak results.

New York index futures suggest Wall Street will open in the green, with the Dow Jones down 0.91%, while the Standard & Poor’s 500 lost 1.18% and the Nasdaq 1.71%.

In Paris, the CAC 40 fell by 0.92% to 7,302.65 points at around 11:30 GMT. The Dax in Frankfurt declined by 1.53%, compared to 0.32% for the FTSE in London.

The pan-European FTSEurofirst 300 index fell by 1.69%, compared to 1.75% for the EuroStoxx 50 and 1.86% for the Stoxx 600.

The US employment report for July will be published at 12:30 GMT, a risk indicator as markets have read into the latest figures on US labour markets published this week the beginning of a marked slowdown in the US economy.

In fact, new jobless claims, activity surveys and new job offers all showed a weakening of employment dynamics, while the Federal Reserve warned on Wednesday that the risks to employment were now comparable to those weighing on inflation.

Markets are concerned, however, about the pace of the tapering, which they say is likely to be faster than the Fed had anticipated. Investors are now expecting more than 75 basis points of easing over the year, suggesting rates will need to be cut quickly and significantly to try to support the economy.

“Risk aversion has spilled over into equities following the BoJ decision and poor results from the technology sector, as signs of a cooling US labour market have mounted,” said Kenneth Broux, head of corporate research at Societe Generale.

Geopolitical tensions also encourage the search for safe assets.

Adding to the macroeconomic concerns is a series of bad news from the technology sector.

Amazon, one of the “Magnificent Seven,” posted disappointing figures on Thursday, while Intel slumped in electronic trading after announcing the suspension of its dividend. Nvidia, which is the subject of an antitrust investigation by the U.S. Justice Department, is also under pressure.

VALUES TO FOLLOW ON WALL STREET

Amazon.com said Thursday it expects its revenue for the current quarter to fall well short of Wall Street estimates.

Apple reported a return to sales growth in the third quarter on Thursday, as iPhone sales beat market expectations.

Intel said Thursday it will cut more than 15% of its workforce and suspend its dividend starting in the fourth quarter.

VALUES TO FOLLOW IN EUROPE

The banking sector continued its decline that began on Thursday, falling by 2.54%. The drop is notably attributable to Société Générale, which lost 4.72% after several analysts lowered their recommendations on the stock.

Technology is down 4.65% after poor results from Intel and Amazon, and in a broader context of risk aversion. ASML is down 8.17%, ASM International is down 11.03%, BE Semiconductor is down -8.99%, Infineon is down 4.68% and Aixtron is down 2.66%. In Paris, STMicroelectronics and Soitec are down 4.36% and 2.86%.

Engie raised its annual outlook on Friday, supported by a good first half in a context of a return to normal in energy market conditions, and gained 3.24%.

IAG rose 7.063% after beating expectations for second-quarter profit and dividend, as the British airline also announced it had withdrawn its takeover bid for Spain’s Air Europa.

RATE

Yields are falling on both sides of the Atlantic as investors worry about a slowing US economy ahead of another major data release on Friday.

The yield on the German ten-year bond weakened by 4.7 bp to 2.203%, while that of the two-year rate lost 5.2 bp to 2.415%.

The ten-year Treasury yield lost 4.4 bp to 3.9338%, while the two-year fell 4.9 bp to 4.1162%.

CHANGES

The dollar is falling sharply as investors bet on more Fed rate cuts, which would put pressure on the currency.

The dollar fell 0.33% against a basket of benchmark currencies, the euro gained 0.38% to $1.0832, and the pound sterling gained 0.04% to $1.2744.

OIL

The barrel is slightly up, with geopolitical uncertainties supporting the barrel despite the slowdown in the American economy.

Brent gained 0.15% to $79.64 per barrel, while American light crude (West Texas Intermediate, WTI) rose 0.13% to $76.41.

MAIN ECONOMIC INDICATORS ON THE AGENDA FOR AUGUST 2:

COUNTRY GMT INDICATOR PERIOD CONSENSUS PREVIOUS

USA 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 Corentin Chappron, edited by)

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