PARIS (Reuters) – European stock markets are expected to fall sharply on Friday, while a key report on employment will be published during the day in the United States and geopolitical tensions and restrictive comments fuel risk aversion.
Futures contracts suggest an opening down 1.15% for the Parisian CAC 40, compared to 1.07% for the FTSE in London, 1.26% for the Dax in Frankfurt, and 1.47% for the EuroStoxx 50.
The monthly US employment report for March, released at 12:30 GMT by the Labor Department, is the main indicator in a data-rich week.
An upward surprise could erode market confidence in the rapid return of inflation to its target and in upcoming rate cuts from the Federal Reserve.
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Several US monetary policymakers will speak on Friday, including Susan Collins, Thomas Barkin, Lorie Logan and Michelle Bowman.
Investors will be paying attention to statements from members of the Fed’s board of governors, as the tone within the central bank has taken a more restrictive turn in recent weeks.
Minneapolis Fed President Neel Kashkari said Thursday that he favored two rate cuts this year during the Fed’s last meeting, but that might not be necessary if the Inflation continued to stagnate.
For his part, his counterpart at the Richmond Fed, Thomas Barkin, estimated that the institution had time ahead of it, before “the clouds” of inflation disappear, to start reducing rates.
Added to these comments is the rise in geopolitical tensions, as Israel prepares for a response from Iran after the bombing of an Iranian consulate in Damascus earlier this week, supporting oil prices and weighing on risky assets.
A WALL STREET
The New York Stock Exchange ended sharply lower on Thursday as investors questioned the possible easing this year of the Fed’s monetary policy, whose officials made cautious comments on rate cuts.
The Dow Jones index fell 1.35%, or 530.16 points, to 38,596.98 points. The broader S&P-500 lost 64.28 points, or 1.23%, to 5,147.21 points. The Nasdaq Composite fell 228.38 points (1.40%) to 16,049.08 points.
All major sectors of the S&P-500 ended the session in the red. Technology recorded the biggest decline (1.7%).
IN ASIA
The Tokyo Stock Exchange is falling in the wake of Wall Street. The Nikkei index lost 1.96% to 38,992.08 points and the broader Topix lost 1.07% to 2,702.71 points.
Semiconductor-related stocks posted the biggest losses in the index, with Tokyo Electron dropping 5.29% and Advantest 4.63%.
Chinese markets are closed for the Qing Ming festival.
RATE
US yields vary shortly before the publication of the monthly employment report.
The ten-year Treasury yield is stable at 4.3175%, while the two-year rate remains at 4.6499%.
The German ten-year yield fell by 2.1 bp to 2.337%, while that of the two-year rate fell 3.1 bp to 2.828%.
CHANGES
The dollar is rising as investors seek to limit their exposure to risk.
The dollar gained 0.17% against a basket of reference currencies, while the euro lost 0.12% to 1.0822 dollars, and the pound sterling 0.18% to 1.2617 dollars.
In Asia, the yen strengthened by 0.09% to 151.2 yen per dollar, while the Australian dollar decreased by 0.26% to 0.657 dollars.
OIL
Geopolitical tensions are supporting crude, as a NATO official said Thursday that Russian refining capacity has fallen by up to 15% after Ukrainian attacks in recent weeks.
Brent advanced 0.56% to $91.16 per barrel, with American light crude (West Texas Intermediate, WTI) gaining 0.39% to $86.93.
(Written by Corentin Chappron)
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