by Marc Angrand
PARIS (Reuters) – Wall Street is expected to fall on Friday the day after a flash rebound at the end of the session and European equities erased some of their heavy losses from the previous day mid-session, even if the conflict in Ukraine and the economic and financial implications remain the primary concern of investors.
Futures contracts on the main New York indices signal a decline of 0.77% for the Dow Jones, 0.7% for the Standard & Poor’s 500 and 0.54% for the Nasdaq.
All three ended up Thursday, 3.34% for the Nasdaq, after the announcement by US President Joe Biden of economic sanctions against Russia deemed limited. And the European Union then unveiled a new set of measures without going, in particular, to exclude Russia from the SWIFT international interbank payment system.
In Paris, the CAC 40 gained 1.76% to 6,636.01 points around 11:55 GMT. In London, the FTSE 100 takes 2.1% and in Frankfurt, the Dax advances by 1.51%.
The EuroStoxx 50 index is up 1.65%, the FTSEurofirst 300 1.87% and the Stoxx 600 1.99%.
They had all fallen between 3% and 4% on Thursday and the Stoxx 600 had fallen in session to its lowest level since last May. Over the week as a whole, the broad European index has so far posted a drop of 2.82% and the CAC 40 a decline of 4.23%, their worst weekly performance since the end of November.
“I expect visibility to remain low and it is not yet clear whether risk appetite can extend beyond the weekend,” said Christian Stocker, equity strategist at UniCredit.
“But from a valuation perspective, it is very likely that equity markets have reached an attractive low point,” he adds.
The Stoxx 600 is trading nearly 13% below its early January peak. Goldman Sachs lowered its target on the index to 490 points from 530 citing risks related to Ukraine.
Fighting continued in Ukraine on Friday morning and missile fire targeted the capital, Kiev, where authorities say they are preparing for an assault aimed at overthrowing the government.
VALUES IN EUROPE
The rebound in Europe primarily benefits defensive sectors, such as utilities, whose Stoxx index gains 4.77%, or real estate (+3.58%).
Defense stocks also remain surrounded, like the French Thales (+4.26%) or the British BAE Systems (+4.50%).
In the news of the results, Valeo fell by 10.42% after the presentation of medium-term forecasts considered disappointing by analysts and Casino by 13.42% after a drop in its profits and an increase in its debt in 2021.
Saint-Gobain, on the other hand, gained 5.91% after a record financial year.
In Frankfurt, Volkswagen and Porsche SE took 4.02% and 1.75% respectively after the presentation of the details of their agreement on a possible IPO of Porsche AG.
RATE
The yield on ten-year U.S. Treasuries is nearly flat at 1.9774% pending monthly U.S. household income and spending data, which includes the closely watched PCE consumer price index. by the Federal Reserve.
The two-year yield, however, takes four basis points to 1.5897%.
In Europe, the ten-year German rose by one point to 0.185% after the sharp decline caused Thursday by the sudden decline in safe havens.
Two weeks before the meeting of the European Central Bank (ECB), investors are keeping an eye on the declarations of its officials, its monetary strategy risking being complicated by the situation in Ukraine, which can weigh on growth and boost inflation.
CHANGES
The euro, which pared its losses late Thursday after falling to its lowest level since June 2020 against the dollar, is struggling to stabilize after failing to sustainably rise above 1.12.
The single currency has lost more than 1.2% since the start of the week and is heading for its third negative weekly performance in a row.
The dollar index, which measures the fluctuations of the greenback against a basket of reference currencies, is practically unchanged but has increased by more than 1% since Monday.
OIL
Trending higher during the first part of the day due to fears of market tensions linked to the situation in Ukraine, crude prices are now down sharply.
Brent fell 0.87% to 98.22 dollars a barrel and US light crude (West Texas Intermediate, WTI) fell 0.58% to 92.27 dollars. They had previously gone up to 101.99 and 95.64 dollars respectively.
(Written by Marc Angrand, with Sruthi Shankar in Bangalore, edited by Jean-Michel Bélot)