by Claude Chendjou
PARIS (Reuters) – Major European stock markets are expected to fall slightly on Friday after a wave of optimism recently lifted stock markets following a sharp drop in interest rates in the United States.
According to the first available indications, the Parisian CAC 40 should lose 0.19% at the opening. The Dax in Frankfurt could fall by 0.33%, while the FTSE 100 in London should drop 0.56%. The EuroStoxx 50 index is expected to fall by 0.43% and the Stoxx 600 by 0.38%.
On the last day of a week marked by numerous monetary policy decisions in the United States, Great Britain, Norway and Japan, caution should now prevail in Europe, even if in Asia, excluding China, the stock markets are set to continue their rise.
Investors welcomed the sharp rate cut by the US Federal Reserve (Fed) this week, which is now putting pressure on the European Central Bank (ECB)’s October meeting. However, the Bank of England (BoE) opted for a pause on Thursday after its first monetary easing in the current cycle last month.
The Bank of Japan also decided on Friday to keep its short-term rate target unchanged at 0.25% but did not rule out raising it depending on the development of the economic situation, a trajectory that is the opposite of that of the other major monetary institutions in the world.
In China, the central bank also kept its key interest rates unchanged, thwarting expectations of a cut.
Financial market optimism has been fueled in recent days by hopes of a soft landing for the US economy and a sustained pace of interest rate cuts by other central banks. In the absence of new catalysts, with UK retail sales being the main data of the day, investors in Europe could opt for profit-taking in sectors that have performed strongly, such as technology and cyclical stocks.
A WALL STREET
The New York Stock Exchange ended sharply higher on Thursday, with the Dow Jones and the S&P 500 hitting record closing records as investors welcomed the Fed’s announcements.
The Dow Jones index gained 1.26% to 42,025.19 points.
The broader S&P 500 gained 1.70% to 5,713.64 points.
The Nasdaq Composite rose 2.51% to 18,013.981 points.
Growth stocks, led by new technology giants, took full advantage of this wind of optimism on the markets, with gains of 1.8% for Microsoft, 3.7% for Apple, 3.9% for Meta Platforms and 7.4% for Tesla.
The semiconductor sector also shone, with its Philadelphia SE Semiconductor index gaining 4.3%. Nvidia jumped 4%, Advanced Micro Devices 5.7% and Broadcom 3.9%.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index rose 1.97% to 37,885.9 points, in the wake of the positive close in New York. The broader Topix gained 1.59% to 2,658.34 points. The trend is supported by technology stocks such as Tokyo Electron (+5.69%) and automotive stocks, including Toyota Motor (+1.38%) and Honda (+1.91%), which are benefiting from a bout of weakness in the yen following the BoJ’s decision.
The MSCI index of Asia and Pacific stocks (excluding Japan) gained 0.70%.
In China, the Shanghai SSE Composite fell by 0.23% and the CSI 300 fell by 0.27%, in reaction to the central bank’s unexpected decision to leave rates unchanged.
CHANGES/RATES
The Japanese currency, which fell to 142.92 yen per dollar during the session, reduced its losses around 0510 GMT, as the BOJ showed optimism about economic growth and indicated that it would be cautious in further tightening its monetary policy.
The dollar fell 0.05% against a basket of benchmark currencies.
The euro rose 0.02% to $1.1163 and is expected to gain 0.8% over the week as a whole.
The pound is trading at $1.3288 (+0.03%) and could see a weekly gain of 1.1%.
The yield on 10-year US Treasury bonds fell 2.7 basis points to 3.713%, after falling 3.2 points the previous day.
OIL
The oil market is down slightly on Friday but should record a second consecutive weekly gain over the week as a whole, thanks to the sharp drop in interest rates in the United States and global crude inventories.
Brent fell by 0.29% to $74.66 per barrel and American light crude (West Texas Intermediate, WTI) fell by 0.14% to $71.85.
(Written by Claude Chendjou)
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I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
