Europe rises cautiously, with Wall Street expected to be volatile

By Claude Chenjou

PARIS (Reuters) – Wall Street was expected to be mixed on Friday and European stock markets edged cautiously higher in mid-session amid fears central banks are still determined to continue monetary tightening despite signs of an accelerated deterioration in monetary policy. Economical situation.

New York index futures indicated Wall Street could advance 0.11% for the Dow Jones, the Standard & Poor’s 500 0.23% and the Nasdaq 0.62%.

In Paris, the CAC 40 rose 0.65% to 6,996.93 at around 12:40 GMT. In Frankfurt, the Dax index gained 0.53%, and in London, the FTSE gained 0.15%.

Pan-European FTSEurofirst 300 index increased by 0.24%, Eurozone EuroStoxx 50 by 0.54%, and Stoxx 600 by 0.30%.

For the week as a whole, the CAC 40 is down 0.34% at this stage and the Stoxx 600 is down 0.15%, as early-year euphoria has led to profit-taking, with some analysts pointing to the possibility of a rally. exaggerated.

“The (European) market is still unprepared for the wave of pain from tightening credit conditions,” wrote Andreas Bruckner, European equity strategist at Bank of America.

In the first three weeks of 2023, the Stoxx 600 recovered almost half of its 12.9% loss in 2022 amid expectations of China’s reopening, lower interest rate hikes, while European Central Bank (ECB) officials favored the Federal Reserve Bank of America. The Reserve (Fed) is ramping up announcements that point to a more significant and prolonged monetary tightening than expected.

At the same time, recent economic indicators in the US, such as industrial production and retail sales, are raising fears of a deeper-than-expected recession.

UK retail sales showed an unexpected 1% fall in December, according to today’s statistics. Investors will note US home resale data at 15:00 GMT, which could support the prospect of a weaker real estate market.

WALL STREET VALUES WILL BE OFFERED

Netflix rose 6.1% in pre-market trading after it reported quarterly earnings that beat subscriber expectations on Thursday evening. Reed Hastings, co-founder of the online video service, also announced that he is stepping down as CEO, handing over control of the group to a duo of deputy and chief operating officer.

VALUES IN EUROPE

Hopes that the reopening of China’s economy will benefit global growth benefited basic resources (+0.24%) and energy (+0.39%) on Friday, while shares topped the Stoxx 600 (+1.03%) rises again. after losing more than 2% the day before.

In individual stocks, China-exposed LVMH and Hermès gained 0.95% and 1.14%, respectively.

TotalEnergies advanced 1.23%, BP advanced 0.37% and Eni advanced 0.94%.

Bucking the trend, Siemens Energy retreated after it lowered its annual profit forecast due to ongoing problems with its wind turbines.

Sweden’s Ericsson group, weighed down by a slowdown in the American market in the fourth quarter, fell 4.75%, followed by Nokia, which fell 1.87%.

RATE

Bond yields in Europe have been driven by recent restrictive statements from ECB officials such as Francois Villeroy de Galhau, Olli Rehn and Christine Lagarde.

The ten-year German Bund yield edged up nine basis points to 2.14%, but remained below its 11-year peak hit on January 2 at 2.569%. The Bund is up just over five points at 2.57% over two years.

In the US, the yield of two-year treasury bills also increased by five points to 4.16%, and the ten-year one increased by 3.6 points to 3.43%.

CHANGES

The safe-haven dollar rose 0.32% against other major currencies amid jitters over recent US economic performance.

The Japanese currency, which is trading at 130.19 yen against the dollar, is being punished by comments from Bank of Japan Governor Haruhiko Kuroda, who assured the institution that the institution will continue its “extremely accommodative” policy at the Davos Forum.

The pound was down 0.32% at $1.2349 after an unexpected decline in UK retail sales in December.

The euro was almost flat (+0.06%) at $1,082.

OIL

Oil prices are heading for a second straight week of gains, still supported by the prospect of a rebound in demand from China:

Brent rose 0.27% to $86.39 a barrel, while US light oil (West Texas Intermediate, WTI) rose 0.20% to $80.49.

(Writing by Claude Chendjou, Editing by Kate Entringer)