EUROPEAN EQUITIES ARE EXPECTED TO RETURN UP FOR THE BEGINNING OF THE WEEK
by Laetitia Volga
PARIS (Reuters) – The main European stock markets are expected to rise at the opening on Monday and should erase part of the losses of the previous session following the figures on the American employment, while awaiting new indications on the evolution of inflation.
The first indications available give a gain of 0.52% for the Parisian CAC 40, 0.51% for the Dax in Frankfurt, 0.34% for the FTSE in London and 0.59% for the EuroStoxx 50 .
The unexpected announcement on Friday of a sharp acceleration in July of job creations in the United States to 528,000 accompanied by a decline in the unemployment rate to its pre-pandemic level allayed fears of recession but also reinforced the prospect that the Fed will continue to rapidly raise its interest rates.
“Employments showed the exact opposite of a slowing economy…which means it’s going to be very hard to support the idea of a Fed rate cut before the end of next year,” said Thomas Tzitzouris, research manager at Strategas.
The very strong US jobs data only raised the stakes around the monthly consumer price (CPI) figures, due on Wednesday, which could show a slight decline in inflation to 8.7%, according to the Reuters consensus, but a further acceleration of the “core CPI” index.
AT WALL STREET
The New York Stock Exchange ended in mixed order on Friday, with the Nasdaq penalized by technology stocks after strong employment data in the United States revived fears of a rapid monetary tightening by the Fed.
The Dow Jones Industrial Average gained 0.23% to 32,803.47 points, the broader S&P-500 lost 0.16% to 4,145.19 points and the Nasdaq Composite fell 0.50% to 12,657. .56 points.
Tesla fell 6.6% and weighed heavily on the S&P-500 and Nasdaq. Meta, owner of Facebook, lost 2% and Amazon 1.24%.
US Treasury yields climbed as the likelihood of a 75 basis point interest rate hike in September increased, pushing bank stocks, such as JPMorgan (+3%) higher.
Lyft jumped 16.62% after reporting record quarterly profit and said it expects adjusted operating profit of $1 billion for 2024.
Futures are signaling a flat session on Monday.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei advanced slightly (0.31%), supported by the solid outlook presented by several companies.
Suzuki Motor climbed 10.09% after reporting a 36.8% jump in quarterly operating profit while game maker Bandai Namco gained 4.16% after raising its half-year profit forecast.
In China, the CSI 300 dropped -0.4% as the health crisis and tensions with Washington kept the market nervous.
The island of Hainan, dependent on tourism, has placed more districts under lockdown in the face of an epidemic resumption of COVID-19.
RATES/EXCHANGES
The yield on ten-year US Treasuries fell slightly to 2.8231%, retaining most of the gains made in reaction to the jobs data. It had risen in Friday’s session to 2.869%, its highest level since July 22.
The dollar is stable against a basket of major currencies, after gaining 0.88% on Friday, and the euro is trading around $1.0185
OIL
After hitting their lowest level in several months, oil prices rose slightly, as US employment figures and Chinese export data eased recession fears.
Brent rose 0.46% to 95.36 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.38% to 89.35 dollars.
(Written by Laetitia Volga, edited by)