by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to rise on Friday at the opening and European stock markets are also in the green at mid-session with easing on the bond market pending the publication of a key inflation indicator in the UNITED STATES.
New York index futures signal Wall Street opening up 0.44% for the Dow Jones, 0.43% for the Standard & Poor’s 500 and 0.57% for the Nasdaq.
In Paris, the CAC 40 rose 1.11% to 7,195.41 points around 11:30 GMT. In Frankfurt, the Dax rose by 1.03% and in London, the FTSE rose by 0.82%.
The pan-European FTSEurofirst 300 index is up 1.07%, the eurozone EuroStoxx 50 is up 1.12% and the Stoxx 600 is up 1.19%.
Over the entire quarter, dominated by fears about the trajectory of interest rates from the main central banks, the CAC 40 nevertheless lost at this stage 2.76% and the Stoxx 600 1.77%.
Investors will be informed at 12:30 GMT in the United States of household income and spending figures for the month of August, a statistic which includes the PCE price index, the preferred measure of inflation by the American Federal Reserve (Fed ).
With the core PCE price index expected to remain stable at 0.2% in August, investors are currently feeling rather optimistic, as evidenced by the decline in ten-year and two-year US bond yields.
“If the Core PCE price index produces some kind of upside surprise, then this reprieve for risky assets could be short-lived,” warns Tim Waterer, chief market analyst at KCM Trade.
“Any sign of an increase in underlying inflationary pressures would increase the likelihood of a (rate) hike in November,” he adds.
Traders are currently counting with an 83% probability of a status quo on rates for the November Fed meeting and a 66% probability of a continuation of this pause for the December meeting, according to the CME Group’s Fedwatch barometer.
In the euro zone, where inflation is also a major concern, the consumer price index decelerated to 4.3% year-on-year this month, to its lowest level in two years, after a increase of 5.2% in August. This could convince the European Central Bank (ECB) that rates are now at a restrictive enough level, risking harm to the economy.
Retail sales in Germany, the largest economy in the currency bloc, fell unexpectedly in August, by 1.2% compared to the previous month, according to data from the Federal Statistical Office.
VALUES TO FOLLOW AT WALL STREET
Nike climbs 7.9% in pre-market trading after the sports equipment manufacturer published Thursday evening a profit higher than expectations for the first quarter of its fiscal year.
VALUES IN EUROPE
The improvement in Europe, following an easing of rates, primarily benefits the new technologies (+1.86%) and luxury (+2%) segments, considered a growth sector.
In Paris, LVMH, Hermès and Kering gained from 0.69% to 2.98%. The confirmation of a preliminary investigation by the public prosecutor targeting Bernard Arnault, CEO of LVMH, for possible money laundering has no effect on the stock.
Atos is up 3.53% with the rebound in “tech” and after information according to which the general director of the BDS (Big Data and Cybersecurity) division has been dismissed from his position.
Adidas jumped 6.36% in the wake of the publication of Nike results.
RATE
Bond yields fell on Friday, with the American ten-year yielding more than three basis points, to 4.5629%, while its German equivalent fell by almost ten points, to 2.861%.
However, yields in the euro zone are on track to record their strongest quarterly rise in a year amid fears of prolonged monetary tightening. The German ten-year gained more than 45 basis points over the quarter.
CHANGES
The dollar is also on track to achieve its best quarter over a year, despite its depreciation this Friday against a basket of reference currencies (-0.39%). The note has gained 2.8% at this point in the third quarter after 11 straight weeks in the green, its longest streak in nine years.
The euro is trading at $1.0594 (+0.33%), moving away from a multi-month low hit this week at $1.0488.
The pound sterling, which returned from a low since March 17 reached this week, was posted on Friday at 1.2255 dollars (+0.48%), as official revised data showed that Britain’s economic performance since the start of the COVID-19 pandemic has been stronger than previously reported.
OIL
The oil market is heading towards a 2% gain this week, driven by the drop in crude stocks in the United States and the prospect of strong Chinese demand during “Golden Week”, a week of annual holidays in China which starts this Friday.
Brent advanced 0.89%, to $96.23 per barrel, and American light crude (West Texas Intermediate, WTI) rose 0.97, to $92.6.
(Written by Claude Chendjou, edited by Blandine Hénault)
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