by Laetitia Volga
PARIS (Reuters) – Wall Street is expected to open on Friday without much change, a trend that is confirmed mid-session for European stock markets in lower trading volumes with the absence of many investors for the Thanksgiving weekend. Futures contracts are signaling a gain of 0.19% for the Dow Jones, 0.18% for the Standard & Poor’s-500 and a decline of 0.1% for the Nasdaq. US equity markets will close earlier than usual, starting at 7:00 p.m. GMT. In Paris, the CAC 40 gained 0.17% to 6,718.54 around 12:20 GMT. In Frankfurt, the Dax takes 0.06% and in London, the FTSE gains 0.28%.
The pan-European FTSEurofirst 300 index advanced by 0.14%, the EuroStoxx 50 of the euro zone by 0.13% and the Stoxx 600 by 0.07%.
For the moment, this is showing an increase of 1.9% over the week as a whole and the CAC 40 an increase of 1.2%, which would mark the sixth positive weekly performance in a row for the European index and the eighth for the Paris index.
The good performance of the equity markets was reinforced by the publication of the “minutes” of the last Federal Reserve meeting, which revived hopes of a slowdown in US rate hikes.
“Equities are following the usual year-end bullish pattern, helped by falling yields. As we are about to enter the year 2023 and move from inflation to disinflation, we believe the Shares should come under less pressure,” Barclays strategists wrote in a note.
“However, we caution against extrapolating recent risk-taking to 2023… We have yet to see the effects on the economy and corporate earnings of central bank actions.”
Among the few indicators of the day, German GDP progressed more in the third quarter than initially announced (+0.4% and +1.3% over one year). WALL STREET VALUES TO FOLLOW
VALUES IN EUROPE
The energy sector gained 0.78%, among the strongest gains at mid-session, thanks to the rise in oil prices. In Paris, TotalEnergies gains 1.21% while Shell advances by 1.15% in London.
In Zurich, Credit Suisse fell 1.24%, after reaching its historic low in the session. The Swiss bank announced on Wednesday that it had placed 462 million new shares as part of a capital increase and the shareholder Saudi National Bank, by buying 307 million, increased its stake to 9.9%.
RATE
Movements are limited on US government bonds with the Thanksgiving weekend. The yield on ten-year Treasuries was almost unchanged at 3.7165% after a trough of about a month and a half at 3.65%.
In European markets, the spread between two- and ten-year German Bund yields widened to -27 basis points in the session, its lowest level since 1992.
This inversion of the bond yield curve, generally considered a signal of an upcoming recession, suggests, according to Christoph Rieger at Commerzbank, that investors expect the European Central Bank to halt the rise in its rate hikes, or even lowers them, in 2023.
The strategist, however, expects the institution to continue raising rates more than the market expects.
EXCHANGES The dollar gained 0.29% against a basket of benchmark currencies, which should not prevent it from posting a weekly drop with the prospect of a slowdown in monetary tightening by the Fed.
The euro fell 0.12% to 1.0395 dollars.
OIL
Oil prices are up in an illiquid market but are expected to fall over the week on concerns about the COVID-19 outbreak in China.
Brent rose 1.49% to 86.61 dollars a barrel and US light crude (West Texas Intermediate, WTI) 2.19% to 79.65 dollars.
(Laetitia Volga, edited by Sophie Louet)
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