by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to rebound slightly, while European stock markets fall mid-session in a context of uncertainty over the timing of the rate cut by the major central banks, with the president of the American Federal Reserve having tempered expectations in this area. New York index futures signal Wall Street opening up 0.24% for the Dow Jones, 0.28% for the Standard & Poor’s 500 and 0.19% for the Nasdaq. This timid rebound comes after a drop from 0.65% to almost 1% on Thursday. In Paris, the CAC 40 fell 0.97% to 7,044.63 points around 1:15 p.m. GMT. In Frankfurt, the Dax fell by 0.64% and in London, the FTSE lost 1.3%.
The pan-European FTSEurofirst 300 index fell by 0.79% and the eurozone’s EuroStoxx 50 by 0.72%. The Stoxx 600 is down 0.97%, returning from a three-week high reached on Thursday.
Over the week as a whole, the CAC lost 0.02% at this stage and the Stoxx 600 lost 0.17%.
Speaking at a conference hosted by the International Monetary Fund (IMF), Jerome Powell said Thursday that (Fed) officials “are not convinced” that interest rates are high enough to fight against inflation.
These comments, considered restrictive in relation to the expectations of the markets which have been betting since last week on a reduction in Fed rates in the second quarter of 2024, caused American bond yields to rise on Thursday.
Traders now expect a probability of around 60% on a first rate cut by the Fed at the June meeting, compared to a probability of 70% before Jerome Powell’s speech.
The economic data expected next week will be particularly closely monitored in this regard, since they will make it possible to confirm or not this hope.
VALUES TO FOLLOW AT WALL STREET
Technology and growth groups like Alphabet, Nvidia and Tesla, sensitive to fluctuations in interest rates, fell by 0.5% to 1.5% in pre-market trading.
VALUES IN EUROPE
In Paris, Valneva jumped 7.67% after the green light in the United States on its vaccine against chikungunya. This is the first time in the world that a vaccine against this disease has been authorized for marketing.
On the publications side, JCDecaux advances by 1.27% thanks to an increase in its adjusted turnover in the third quarter, while Scor plunges by 4.74% after a quarterly result lower than expectations.
Richemont fell 6.4%, with the group forecasting a slowdown in growth due to economic fears. In its wake, LVMH, Kering and Hermès fell from 2.24% to 4.48%, while the European luxury sector lost 3.23%, heading towards its biggest drop in a month.
Diageo fell by 15.0%, as the maker of Johnnie Walker whiskey anticipated a drop in organic growth in its operating profit in the first half of its current fiscal year. The food and beverages sector lost 3.42%.
Allianz increased by 1.69%, the German insurer having published quarterly results better than expected and confirmed its annual forecasts.
RATE The yield on the ten-year German Bund rises by more than five basis points, to 2.709% after comments considered restrictive by several officials of the European Central Bank (ECB) such as Joachim Nagel and Luis de Guindos.
The President of the ECB, Christine Lagarde, declared for her part that if the rate level was maintained long enough this would contribute to the return of inflation to the 2% objective.
In the United States, the yield on ten-year Treasuries fell by 3.4 basis points, to 4.5924%, after having increased by 11 points the day before.
EXCHANGES The dollar, which at this stage gained 1.39% over the week as a whole against the Japanese currency, is heading towards its best weekly performance in three months against the yen, reflecting the divergences in monetary policy between the Fed and the Bank of Japan. The greenback hit a nearly one-year high on Friday, at 151.43 yen.
Against the European currency, however, the American currency fell by 0.14% to 1.0681 dollars.
The pound sterling fell 0.06% to $1.2214 after data showed the British economy stagnated in the third quarter.
In cryptocurrencies, bitcoin was trading at $36,499 on Friday, after peaking at $37,978 the day before, its highest level since May 2022, amid speculation about the imminent approval of BlackRock’s “Bitcoin spot ETF”.
OIL
The oil market is trending upwards on Friday but is heading towards a third consecutive weekly decline throughout the week due to concerns about demand.
Brent gained 1.04% to $80.84 per barrel and American light crude (West Texas Intermediate, WTI) gained 0.96% to $76.47.
The two oil benchmarks are losing around 5% at this stage over the past week.
MAIN ECONOMIC INDICATOR ON THE AGENDA FOR NOVEMBER 10
COUNTRY GMT INDICATOR PERIOD PREVIOUS CONSENSUS
USA 3:00 p.m. Confidence index for Nov. 63.7 63.8
Michigan (1st estimate)
(Written by Claude Chendjou, edited by Blandine Hénault)
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