by Diana Mandia
(Reuters) – Wall Street is expected to be directionless and European stock markets are trading slightly on Friday mid-session, with caution prevailing as French President Emmanuel Macron is due to announce the name of the new Prime Minister in the coming hours. New York index futures signal Wall Street opening up 0.06% for the Dow Jones, but down 0.01% for the Standard & Poor’s-500 and the Nasdaq. In Paris, the CAC 40 gained 0.03% to 8,043.80 points around 10:48 a.m. GMT. In Frankfurt, the Dax fell by 0.18% and in London, the FTSE 100 lost 0.10%.
The EuroStoxx 50 index is down 0.03%, the FTSEurofirst 300 0.12% and the Stoxx 600 0.15%.
The markets’ attention is once again focused on France this Friday, where President Emmanuel Macron is due to announce during the day the appointment of a new Prime Minister after the resignation on Monday of Sébastien Lecornu, which plunged the second largest economy in the euro zone into a new political crisis.
The sudden resignation of the tenant of Matignon, who had only been in office for less than a month, caused the CAC 40 to decline and the yields on French sovereign debt to explode at the start of the week, and with them the “spread” between the OAT and the German Bund at 10 years. Any announcement from the Elysée will therefore be closely monitored by the markets, which are not keen on the uncertainty that has reigned in recent days.
“In the short term, this will be a positive development for the French stock market, because it removes part of the risk premium,” said Daniela Hathorn, senior market analyst at Capital.com.
Due to this week’s turbulence, the CAC 40 is heading for a weekly loss, while its Frankfurt counterpart is expected to post gains. The STOXX, for its part, reached a peak at the start of the week, against a backdrop of growing bets for easing of monetary policy by the American Federal Reserve (Fed) and optimism towards AI.
The session is also poor in economic data and financial results in Europe, and the report of the monetary policy meeting of September 10 and 11 of the European Central Bank (ECB), published Thursday, held no surprises: the institution should not be in a hurry to reduce key rates again, even if the level of uncertainty remains exceptionally high.
In the United States, investors are waiting for data on consumer confidence published by the University of Michigan (flash) to obtain new clues on the economy, while the “shutdown” of the federal administration continues.
VALUES IN EUROPE
In terms of values, Stellantis increased by 0.61% after announcing on Friday a 13% increase in its consolidated billings in the third quarter, while its German competitor Mercedes advanced by 2% after a conference with analysts the day before.
The automotive sector is up 0.83%.
Technip Energies and Nexans fell by 5.8% and 3.1% respectively after Exane BNP Paribas downgraded its recommendations on these two stocks.
ArcelorMittal fell 3.12%, Goldman Sachs having lowered its recommendation on the stock to “neutral” from “buy”.
Elsewhere in Europe, German wind and solar farm developer Energiekontor dropped 18% after lowering its profit forecast for 2025.
RATE
Long-term yields fell on Friday in the Eurozone, pending political announcements in France.
The yield on the ten-year German Bund, a benchmark in the euro zone, fell 2.9 basis points to 2.6752% while that of the ten-year French OAT lost 3.7 basis points to 3.4905%.
The yield gap between 10-year German bonds and French bonds of the same maturity, which reflects the risk premium required by investors to hold French debt, stands at 81.30 basis points, after having reached its highest level since January 13 at the start of the week, at more than 88 points. In the United States, the yield on ten-year Treasuries fell by 3.9 basis points to 4.1092%. The two-year in turn lost 1.9 basis points to 3.5805%.
CHANGES
The euro is gaining a little ground (+0.14%) to 1.1579 dollars but is heading towards its biggest weekly decline in 11 months, the political unrest in France having weighed on the single currency in recent days.
The dollar for its part lost 0.25% against a basket of reference currencies, even if it should record its strongest weekly increase in a year.
The Japanese yen, for its part, is preparing to record its biggest weekly decline in a year due to the rapid decline in the chances of a short-term rate hike by the Bank of Japan (BoJ). To be monitored in the coming days, the impact of the announcement of the withdrawal of the centrist Komeito party, a long-time ally of the ruling Liberal Democratic Party (PLD), from the government coalition.
OIL
Oil prices are falling as the market risk premium faded after Israel and Hamas agreed on the first phase of a plan to end the war in Gaza.
The ceasefire agreement in the Palestinian enclave entered into force this Friday, the Israeli army announced.
Brent lost 1.24% to $64.41 per barrel and American light crude (West Texas Intermediate, WTI) lost 1.25% to $60.74.
(Writing by Diana Mandiá, edited by Blandine Hénault)
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