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 while awaiting new indications in the week on the evolution of inflation.
Futures contracts give a gain of 0.39% for the Paris CAC 40, 0.59% for the Dax in Frankfurt, 0.37% for the FTSE in London and 0.67% 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.
Markets estimate the likelihood of a three-quarter point rate hike in September at around 70%, up from around 41% before the statistic was released, according to CME’s FedWatch Barometer.
“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.
These very strong US jobs data only raised the stakes around the monthly consumer price (CPI) figures, due on Wednesday, which could show a slight slowdown in US inflation to 8.7%, according to the Reuters consensus, but a further acceleration of the “core CPI” index.
Michelle Bowman, governor of the U.S. central bank, said on Saturday that further rate hikes of 75 basis points should be considered until inflation does not come down steadily, significantly and sustainably.
AT WALL STREET
The New York Stock Exchange ended in scattered order on Friday, with a Nasdaq penalized by technology stocks after the strong employment data in the United States.
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 ended up slightly (+0.26%), supported by the solid outlook presented by several companies.
Suzuki Motor climbed 10.44% after reporting a 36.8% jump in quarterly operating profit while game maker Bandai Namco gained 4.06% 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 2.8158%, retaining most of the gains made in reaction to the employment figures. It had risen in Friday’s session to 2.869%, its highest level since July 22.
Its German equivalent dropped nearly four basis points in early trading, to 0.919%.
The dollar is stable against a basket of major currencies, after gaining 0.88% on Friday, and the euro is trading around $1.0182
OIL
After hitting their lowest levels in six months on Friday, oil prices are rising, with US employment figures and higher-than-expected Chinese exports alleviating fears of recession.
Brent rose 0.9% to 95.77 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.81% to 89.73 dollars.
(Written by Laetitia Volga, Editing by Kate Entringer)
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