Market: Wall Street expected to increase, US employment in the sights


PARIS (Reuters) – Wall Street is expected to rise on Friday, while European indices advance mid-session before the publication of key indicators in the United States and while good results support stocks.

Futures on New York indices suggest Wall Street opening in the green, with the Dow Jones rising 0.78%, while the Standard & Poor’s 500 takes 0.37% and the Nasdaq 0.64%.

In Paris, the CAC 40 advanced 0.62% to 7,963.8 points around 10:55 GMT. The Dax in Frankfurt gained 0.49%, compared to 0.46% for the FTSE in London.

The pan-European FTSEurofirst 300 index rose by 0.37%, compared to 0.6% for the EuroStoxx 50 and 0.41% for the Stoxx 600.

The markets will be attentive to the publication of employment figures in the United States at 12:30 GMT, which will be essential for the conduct of monetary policy.

The strength of labor markets is indeed one of the main factors of inflation, but it is also one of the two objectives of the Federal Reserve (Fed): the central bank will not lower its rates without an increase in unemployment.

Rabobank Fed specialist Philip Marey expects that an increase in the unemployment rate will push the Fed to cut its key rate twice in 2024. “Progress on inflation is too limited for the central bank is taking action because the United States is still facing a price-wage spiral,” the bank writes.

The ISM activity indicator for services will also be monitored by operators, while the president of the central bank, Jerome Powell, recalled on Wednesday that the inflationary dynamic came mainly from the services sector.

The results of companies published in Europe and the United States also liven up discussions.

“First quarter profits are steadily increasing,” note Barclays analysts, who report better than expected earnings per share growth on both sides of the Atlantic, at -9% in Europe and at +3% in the United States.

“Margins are resilient and offset more moderately rising results. (…) Although the dispersion between positive and negative results is very high, the overall resistance of profits has probably limited the downside risks for stocks,” add the strategists.

VALUES TO FOLLOW IN WALL STREET

Apple reported on Thursday a less significant decline than expected in its turnover in the first quarter and is indicated to be up at the opening.

Paramount Global is the subject of a $26 billion bid filed by Apollo Global Management and Sony Pictures Entertainment, the Wall Street Journal reported.

VALUES TO FOLLOW IN EUROPE

Crédit Agricole SA reported quarterly net profit on Friday that exceeded expectations and increased by 2.81%.

Legrand reported on Friday a drop of 5.6% in its sales in the first quarter, and lost 2.33%.

JCDecaux jumped 8.9% after reporting an 11.1% increase in its turnover in the first quarter.

Societe Generale reported a 21.7% fall in its quarterly net profit on Friday, falling 5.8% during a volatile session.

Ayvens, the car rental subsidiary of Société Générale, reported on Friday a 30.6% increase in margins for rental contracts and services and jumped 11.28%.

Danske Bank fell 5.49% after Denmark’s largest bank reported lower-than-expected net interest income in the first quarter.

Anglo American rose 3.33%, after Reuters reported that Glencore was considering an offer for the mining group.

The Spanish beauty group Puig made its stock market debut on Friday, the largest IPO on the Spanish markets in ten years, but appears stable.

RATE

Yields vary little on both sides of the Atlantic before the publication of the monthly US employment report.

The German ten-year yield weakened by 2.6 bp to 2.528%, that of the two-year rate lost 3.2 bp to 2.966%.

The yield on the ten-year Treasury is stable at 4.5671%, like the two-year which remains at 4.8808%.

CHANGES

The dollar continues its decline that began since the last Fed meeting on Wednesday, but the indicators expected on Friday in the United States could reverse the trend in the event of an upward surprise.

The dollar fell 0.09% against a basket of reference currencies, the euro gained 0.15% to 1.0741 dollars, and the pound sterling 0.18% to 1.2553 dollars.

OIL

Crude is up slightly, as markets digest the impacts of the latest indicators and monetary policy decisions.

Brent nibbles 0.32% to 83.94 dollars per barrel, American light crude (West Texas Intermediate, WTI) advances 0.27% to 79.16 dollars.

MAIN ECONOMIC INDICATORS ON THE AGENDA FOR MAY 3:

COUNTRY GMT INDICATOR PERIOD PREVIOUS CONSENSUS

USA 12:30 Non-agricultural jobs April 243,000 303,000

Unemployment rate 3.8% 3.8%

USA 2:00 p.m. ISM services April 52.0 51.4

(Written by Corentin Chappron, edited by)

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