Recovery in sight in Europe after two sessions marked by the Fed in the red
By Claude Chenjou
PARIS (Reuters) – Major European bourses are expected to open higher on Friday after two consecutive sessions in the red, linked to announcements by the president of the United States Federal Reserve (Fed) seen as restrictive. rising bond and dollar yields.
According to the first indicators available, the Dax in Frankfurt should gain 0.46% at the opening, the FTSE 100 in London should gain 0.57% and the EuroStoxx 50 index should gain 0.7%.
After the Fed’s fourth three-quarter rate hike, Fed Chairman Jerome Powell said on Wednesday that the peak in interest rates will be higher than members of the US central bank expected in September, marking a pause in monetary tightening. “very fast”.
Those comments, which caused widespread risk aversion in financial markets since Wednesday, seem to have now been digested by investors. But the trend could be influenced by the US Labor Department’s monthly employment report, scheduled for release at 12:30 GMT. The Reuters consensus expects job creation to fall by 200,000 in October, the unemployment rate to rise slightly to 3.6% and average wage growth to slow to 4.7% over the year.
In Europe, investors will be watching final figures for services activity in the Eurozone in October and industrial orders in Germany.
Christine Lagarde, president of the European Central Bank (ECB), who will speak on Friday at the invitation of the central bank of Latvia, may also address the topic of interest rates and the fear of economic contraction in the euro zone. In turn, the Bank of England (BoE) announced on Thursday that the cost of credit should not reach the peak expected by the markets due to the risk of recession.
The rest of the session should be enlivened by new results releases from companies including Société Générale and Starbucks.
Societe Generale on Friday posted third-quarter results that beat expectations, buoyed by trading activity that benefited from market volatility, and indicated it was aiming for better earnings this year.
ON WALL STREET
The New York Stock Exchange fell for a fourth straight session on Thursday as economic data did not change investors’ view that the Fed will continue to raise interest rates longer than expected.
The Dow Jones index fell 0.46% or 46.51 points to 32,001.25. The broader Standard & Poor’s 500 lost 39.80 points, or 1.06%, to 3,719.89. The Nasdaq Composite fell 181.86 points (-1.73%) to 10,342.94.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index lost 1.68% to 27,199.74 points, while the broader Topix fell 1.29% to 1,915.4 points.
In China, the SSE Composite of Shanghai gained 2.42%, and the CSI 300 gained 3.34%.
CHANGES
In the currency market, the index, which measures the dollar’s swings against a benchmark basket, was down 0.32% on Friday, after hitting a nearly two-week high a day earlier.
The euro took the opportunity to gain 0.28% to $0.9778.
Sterling bounces back to $1.1218 (+0.47%) after hitting a two-week low on Thursday following the BoE’s warning that the British economy is in a long recession.
RATE
The yield on ten-year U.S. Treasuries was flat at 4.13% after rising nearly seven basis points on Thursday in reaction to Jerome Powell’s remarks. The two-year, the most sensitive to changes in rates, is at 4.70%, marking a new 15-year high, after gaining 14 points on Thursday.
In Europe, the ten-year German Bund yield rose more than 11 basis points to 2.248% on Thursday.
OIL
Oil prices rose on a weaker dollar, but gains were limited by recession fears and questions about Chinese demand amid health restrictions.
Brent rose 1.99% to $96.55 a barrel, US light oil (West Texas Intermediate, WTI) rose 2.2% to $90.11 a barrel.
(Writing by Claude Chendjou, Editing by Jean-Stéphane Brosse)
