by Laetitia Volga
PARIS (Reuters) – Wall Street is expected to rise moderately on Friday, like most European indices at mid-session, but the trend remains fragile as the United States risks finding itself in default in a few days and that monetary tightening by the major central banks should continue.
On Wall Street, index futures are signaling an opening up 0.16% for the Dow Jones, 0.22% for the Standard & Poor’s-500 and 0.39% for the Nasdaq.
In Paris, the CAC 40 took 0.23% to 7,245.75 around 11:05 GMT. In Frankfurt, the Dax gained 0.14% and in London, the FTSE 0.19%.
The pan-European FTSEurofirst 300 index advanced by 0.34%, the EuroStoxx 50 of the euro zone by 0.35% and the Stoxx 600 by 0.36%.
After several rounds of negotiations, US President Joe Biden and top Republican congressional leader Kevin McCarthy appear to be closing in on a deal to raise the debt limit.
The two sides’ positions are only $70 billion apart for discretionary spending, a person familiar with the negotiations said.
“While there is progress, it is still questionable whether members of Congress can reach an agreement before the June 1 deadline,” IG said.
Wall Street being closed on Monday for Memorial Day, American investors could therefore well go on a long weekend with this uncertainty, which could limit risk taking.
The caution is also due to the impending monthly household income and expenditure figures due at 12:30 GMT, which include the PCE price index, the inflation indicator favored by the Federal Reserve.
Excluding the volatile components of food and energy, the “core” index should have increased by 0.3% in April and by 4.6% over one year, like the previous month.
VALUES IN EUROPE
After several days of suspension, Casino shares fell by 8.43%, analysts pointing to the persistence of uncertainties about the heavily indebted distributor after the opening of official negotiations with its creditors.
Atos gains 4.25% after a favorable decision by the American courts in the dispute between its subsidiary Syntel and TriZetto and Coface climbs 7.25% after its quarterly results.
Faurecia gains 4.27%, thanks to the passage of Jefferies to the “purchase”.
At sector level, the basic resources compartment (+2.81%) posted the strongest growth, driven by the rebound in metal prices and the rise in Rio Tinto (+4.01%) which benefits from a recommendation of Morgan Stanley to “overweight”.
The progress observed on the US debt issue pushed the dollar down by 0.28% against a basket of international currencies. But over the week as a whole, the US currency gained around 0.8%, after having benefited from its status as a safe haven and the prospect of high interest rates for a long period in the face of inflation.
Money markets estimate a 42.5% chance that the Fed will raise rates by a quarter point next month and investors have lowered their expectations of a US rate cut this year.
The euro, at $1.074, was up 0.2%.
The ten-year Bund yield rose slightly to 2.497%. Next week’s release of Eurozone inflation figures could give new direction to yields and future ECB metrics.
The central bank’s chief economist, Philip Lane, said on Friday that lower energy prices would feed through to underlying inflation and that rapid wage growth was not putting undue pressure on prices.
On the oil market, Brent rose 0.49% to 76.63 dollars a barrel and American light crude (West Texas Intermediate, WTI) 0.75% to 72.37 dollars.
(Laetitia Volga, edited by Blandine Hénault)
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