European stock exchanges are set to open higher on Friday, buoyed by positive earnings reports from Amazon and Apple, although investors are maintaining caution ahead of the U.S. presidential elections and the monthly employment report. Initial indicators suggest the CAC 40 in Paris may rise by 0.12%. Global markets had previously declined due to concerns over the cost of AI investments for tech giants like Microsoft and Meta. Attention is also focused on upcoming earnings from Chevron and Exxon Mobil, and the expected Fed rate cut.
PARIS (Reuters) – Major European stock markets are predicted to open higher on Friday, with investors reacting positively to the earnings reports from Amazon and Apple, while remaining cautious ahead of the presidential elections and the monthly U.S. employment report. A 25 basis point rate cut by the Federal Reserve is still deemed the most likely scenario.
According to early indications, the Paris CAC 40 index may see a slight increase of 0.12% at the open.
Futures contracts also suggest a nearly stable opening for the DAX in Frankfurt, which may dip by 0.01%, and the FTSE, which is expected to rise by 0.05%.
The previous day, global stock markets closed in the red due to concerns regarding the profitability of AI investments for tech giants like Meta and Microsoft.
As November begins, some indices might regain momentum following the after-hours trading rally for Amazon and Apple, whose earnings exceeded Wall Street expectations on Thursday evening.
Investors are also looking ahead to Friday’s monthly employment report, the U.S. presidential election on November 5, and the Federal Reserve’s upcoming meeting scheduled for the following day.
Unless there is a major surprise in the employment report, markets are pricing in a 94% probability of a quarter-point rate cut by the Fed, supported by strong U.S. consumer data and easing price pressures.
This busy week will conclude with earnings reports from Chevron and Exxon Mobil.
Next week, the focus will shift to the U.S. presidential election, with markets generally remaining cautious amid uncertain poll outcomes.
STOCKS TO WATCH:
Casino has announced a decline in third-quarter sales amidst ongoing restructuring efforts, which include the sale or closure of unprofitable stores.
ON WALL STREET
The New York Stock Exchange closed lower on Thursday as Microsoft and Meta warned of rising costs related to AI development, which could impact their future results, dampening investor enthusiasm for tech stocks that have driven record highs this year.
Despite beating earnings expectations in the third quarter, the after-hours announcements from Microsoft and Meta Platforms fueled concerns over significant AI investments, resulting in respective declines of 6% and 4.1% on Thursday.
Estée Lauder experienced the worst trading session in its history, plummeting by 20.9% after retracting its forecasts for the upcoming year.
IN ASIA
Asian markets traded cautiously on Friday following a busy week of earnings reports and just days ahead of the U.S. presidential election.
The Tokyo Stock Exchange, an outlier, fell by 2.63%, impacted by a stronger yen that weighed on the outlook for major Japanese exporters.
In China, the Shanghai Composite Index rose by 0.3%, while the CSI 300, showcasing large-cap stocks, remained nearly unchanged, up by 0.03%.
INTEREST RATES
Long-term bond yields dipped slightly on Friday after several consecutive increases, as investors regained confidence in the U.S. economy.
The yield on ten-year Treasuries decreased by 1.5 basis points to 4.2686%, while the two-year yield increased by 0.6 basis points to 4.1723%.
In Germany, the ten-year Bund yield rose by 0.6 basis points to 2.3970%, whereas the two-year yield declined by 1.3 basis points to 2.3030%.
FOREX
The foreign exchange market is showing little movement on Friday as traders await U.S. employment data, with the dollar having gained considerable strength thus far.
The dollar increased by 0.02% against a basket of major currencies.
The euro lost 0.08%, trading at 1.0874 dollars.
OIL
Oil prices are on the rise again on Friday as markets consider the potential that Iran may prepare a retaliatory strike against Israel.
Brent crude increased by 1.95% to $74.23 per barrel, while U.S. light crude (West Texas Intermediate, WTI) rose by 2.09% to $70.71.
(Written by Pauline Foret, edited by Kate Entringer)
By Pauline Foret