Market: Caution before the publication of the American employment report


by Claude Chendjou

PARIS (Reuters) – Wall Street is expected to see a slight technical rebound at the opening on Friday, while the European stock markets fell sharply mid-session, correcting in turn after the sharp decline the day before in New York, in a context of volatility increased and uncertainties on geopolitics and rates, before the publication of the highly anticipated American employment report.

Futures on New York indices signal a rebound of 0.15% for the Dow Jones, 0.27% for the Standard & Poor’s 500 and 0.31% for the Nasdaq the day after a session clearly in the red marked by differences between officials of the American Federal Reserve (Fed) on the evolution of key rates.

In Paris, the CAC 40 dropped 1.41% to 8,036.57 points around 11:15 GMT. In Frankfurt, the Dax fell by 1.49% and in London, the FTSE lost 0.89%.

The pan-European FTSEurofirst 300 index fell by 1.07%, the Eurozone EuroStoxx 50 by 1.48% and the Stoxx 600 by 1.12%.

Over the entire week, the CAC 40 lost 2.07% at this stage and the Stoxx 600 1.48% in a context of rising long-term rates in Europe and the United States against a backdrop of doubts about the timing of the monetary easing expected from major central banks.

Among the Fed officials speaking this week, Neel Kashkari said Thursday that if inflation continues to stagnate, a policy rate cut would not be necessary, casting a chill on markets that are pricing in three rent cuts money starting in June.

The figures for wage developments in the United States, contained in the monthly employment report, scheduled for 12:30 GMT, will be particularly closely monitored in this regard.

In the meantime, the nervousness on the market has not subsided since the index measuring volatility in the United States, which reached a peak since November 1 on Thursday, rose again, by 2.01%, to 16.68 points. . Its equivalent on the Eurostoxx 50 soared 17.28%, to 16.05 points.

“There are underlying concerns that the Federal Reserve may not be able to cut rates three times, as it has indicated. A comment from Fed officials…that whether they are voting members or not, moving in the direction of a restrictive policy, makes the market a little nervous,” comments Fiona Cincotta, strategist at City Index.

“Add to that geopolitical tensions, it also disrupts the market. The other problem concerns the prices of raw materials,” she also underlined.

VALUES IN EUROPE

Almost all major sectors of the Stoxx 600 are in the red, with growth stocks such as luxury (-1.58%) and new technologies (-1.25%) showing some of the biggest declines.

The leisure and transport sector (-1.73%) is also suffering with the jump in oil prices.

The geopolitical risk with the conflict in the Middle East and between Russia and Ukraine, on the other hand, benefits the energy sector (+0.14%), allowing TotalEnergies (+0.02%) to be the one of the rare CAC 40 values ​​in the green and for the oil operator Maurel&Prom (+2.68%) to take the lead in the SBF 120.

In corporate news, SoftwareOne fell 0.95% after announcing that all proxy (proxy advisory) companies have now joined the position of the IT group’s board of directors while its founders wanted a replacement of this council following the rejection last year of a purchase offer from Bain.

RATE

The ten-year US Treasury yield rose 2.6 basis points to 4.3335%, and the two-year yield rose about two points to 4.6604% ahead of the release of the Treasury report. American employment for the month of March.

“Markets will likely be sensitive to any surprises in employment data to assess the direction of monetary policy,” underlines Charu Chanana, strategist at Saxo.

The German Bund yields of the same maturities are shown at 2.847% and 2.371% respectively, both practically stable.

CHANGES

The dollar remains firm against a basket of benchmark currencies, gaining 0.03% before the US employment report.

The euro is stable at $1.0835, while the pound sterling trades at $1.2631 (-0.07%).

The yen is trading at 151.38 per dollar while a Japanese official, Tatsuo Yamazaki, warned on Thursday that intervention by the authorities would take place if the threshold of 152 was crossed.

OIL

Oil prices continue to rise, heading for a second weekly gain in a row, amid geopolitical tensions in Europe and the Middle East, fears of falling supply and signs of rising demand.

Brent Reflux rose 0.38% to $90.99 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.21% to $86.77.

Both oil benchmarks are at their highest levels since October and are expected to gain more than 4% each for the week as a whole.

“Oil prices are expected to rise further in the near term, as a more positive economic backdrop is accompanied by persistent supply tightness and growing geopolitical risks,” Daniel Hynes and Soni Kumari write in a note. analysts at ANZ, who see Brent at $95 a barrel in three months.

(Written by Claude Chendjou, edited by Sophie Louet)

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