by Laetitia Volga
PARIS (Reuters) – Wall Street is expected to be close to equilibrium and European stocks fell slightly mid-session on Friday before the publication of monthly employment figures in the United States, which will be closely watched by investors to determine the impact of the Federal Reserve (Fed) rate hike on the economy.
Futures contracts are signaling a gain of 0.06% for the Dow Jones, a decline of 0.02% for the Standard & Poor’s-500 and 0.1% for the Nasdaq. In Paris, the CAC 40 lost 0.48% to 6,481.88 around 11:30 GMT. In Frankfurt, the Dax dropped 0.03% and in London, the FTSE lost 0.16%.
The pan-European FTSEurofirst 300 index fell by 0.26%, the EuroStoxx 50 of the euro zone by 0.33% and the Stoxx 600 by 0.22%.
Investors therefore expect at 12:30 GMT the publication of the official report on job creations in the United States for the month of July as well as its component on the evolution of the average hourly wage.
According to the Reuters consensus, the Labor Department could announce a slowdown in job creation to 250,000, an increase of 0.3% in the average hourly wage and an unemployment rate unchanged at 3.6%.
“We have returned to an environment where bad news is good news and fear of further rate hikes because it could cause a recession, but where a recession is acceptable because it potentially means fewer rate hikes. is not simple,” said Craig Erlam at OANDA.
“Perhaps the report [sur l’emploi] ideal is one in which jobs are strong but not too strong (therefore in line with the consensus), unemployment remains low but wage growth slows down a little. This would correspond to the idea that this is not a real recession while a slight moderation in wage growth could contribute to the easing of inflation indicators, which would allow the increases to slow. [de taux de la Fed] until the end of the year,” added the analyst.
VALUES IN EUROPE
On the stock market, the media sector (-1.05%) is penalized by the fall of 7.28% of the global advertising giant WPP following the publication of insufficient results and forecasts in the eyes of analysts. In its wake, Publicis fell by 3.23%, the red lantern of the CAC 40.
The Stoxx energy index dropped 0.92%, under the effect of the drop in crude prices. Shell, TotalEnergies and BP lost 0.94% to 1.41%.
Insurer Allianz lost 1.93% after posting a bigger-than-expected decline in net profit in the second quarter due to market volatility and restructuring costs.
Still in Frankfurt but this time up, Deutsche Post climbed 4.97% after reporting quarterly results above expectations.
RATE
Benchmark government bond yields are up but remain close to four-month lows hit earlier this week on recession fears.
According to some investors, investors in the bond markets have gone too far in lowering their rate hike expectations.
“Market rhetoric focuses too much on recession risks, assuming that central banks will soon have inflation under control. This view is too optimistic,” said Flavio Carpenzano at Capital Group. “Eurozone inflation may be on the verge of peaking but bringing it back to the ECB’s 2% target will not be an easy task,” he added.
The ten-year German Bund yield gained more than three basis points to 0.837% and its US equivalent took nearly two basis points to 2.6936%.
EXCHANGES The dollar wiped out some of the previous day’s losses and gained 0.21% against a basket of reference currencies.
The euro retreated a little, to 1.0234 dollars.
OIL
Oil prices fell again to approach the lows of six months reached during the previous session due to concerns about the global economic outlook.
Brent lost 0.46% to 93.69 dollars a barrel and American light crude (West Texas Intermediate, WTI) 0.67% to 87.95 dollars.
(Written by Laetitia Volga, Editing by Kate Entringer)
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