New drop in sight on Wall Street, Europe hesitates


by Laetitia Volga

PARIS (Reuters) – Wall Street is expected to fall at the opening while the European stock markets are hesitant on Friday at mid-session, torn between the desire of investors to start this second half on the right foot and concerns about the level of inflation, central bank policies and the risk of recession. Futures contracts are signaling a decline of around 0.35% for the three major Wall Street indices.

In Paris, the CAC 40 gained 0.01% to 5,923.32 around 11:20 GMT. In Frankfurt, the Dax lost 0.02% and in London, the FTSE lost 0.26%.

The pan-European FTSEurofirst 300 index fell by 0.43%, the EuroStoxx 50 of the euro zone by 0.3% and the Stoxx 600 by 0.43%.

The attempt to rebound in European equities initiated during the morning did not manage to resist against the negative orientation of the “futures” of Wall Street, which will take a break on Monday due to the national holiday (Independence Day).

The concerns that dominated the first half, which ended in a fall of around 16.5% for the Stoxx 600, are again at work this Friday, namely the determination of central bankers to control the inflation, leaving to cause a sharp economic downturn.

The indicators published in the morning for the euro zone showed that the rise in consumer prices accelerated more sharply than expected to reach the historical level of 8.6% over one year while manufacturing production fell in June for the first time since the start of the COVID-19 epidemic in the spring of 2020.

WALL STREET VALUES TO FOLLOW

VALUES IN EUROPE

European groups linked to the semiconductor industry are down in reaction to the disappointing quarterly forecasts of the American Micron. STMicroelectronics, Infineon and ASML fell from 1.92% to 3.76%.

The Stoxx technology index lost 1.89%.

On the rise, Sodexo EXHO.PA> gained 2.59% after publishing quarterly sales above expectations and confirming its annual outlook.

RATES/EXCHANGES

Fears about the economy and inflation benefit government bonds, which is reflected in a decline in bond yields: that of the ten-year German Bund lost 6.5 basis points to 1.881% and its equivalent French nearly seven points to 1.881%.

In the United States, the yield on ten-year Treasuries fell to 2.9427%. On the currency market, the dollar advanced by 0.3% against a benchmark basket. The euro is trading around 1.0454, down 0.27%.

OIL

Oil prices are trending higher, with supply disruptions in Libya and a planned production outage in Norway due to a social unrest outweighing fears for demand.

Brent gained 2.37% to 111.61 dollars a barrel and US light crude (West Texas Intermediate, WTI) 2.24% to 108.13 dollars.

MAIN ECONOMIC INDICATORS ON THE JULY 1ST AGENDA:

COUNTRY GMT INDICATOR PERIOD PREVIOUS CONSENSUS

USA 2:00 p.m. ISM manufacturing index June 54.9 56.1

(Written by Laetitia Volga, edited by Sophie Louet)



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