by Laetitia Volga
PARIS (Reuters) – Wall Street is expected to widen its losses from the day before at the opening on Friday and European stocks are down sharply at mid-session on investors’ concerns over monetary policy and the pace of economic growth. and pending U.S. jobs numbers. Futures point to a 0.5% drop for the Dow Jones, 0.63% for the S&P-500 and 0.86% for the Nasdaq . On Thursday, US indices fell 3.12% to 5%, with the Nasdaq recording its worst session in nearly two years and the Dow Jones since October 2020.
In Paris, the CAC 40 lost 1.48% to 6,273.83 points around 11:30 GMT. In Frankfurt, the Dax lost 1.42% and in London, the FTSE lost 0.96%.
The pan-European FTSEurofirst 300 index fell by 1.34%, the EuroStoxx 50 of the euro zone by 1.52% and the Stoxx 600 by 1.46%.
Although Fed Chairman Jerome Powell on Wednesday all but ruled out the possibility of 75 basis point rate hikes – briefly buoying stocks – CME Group’s FedWatch Barometer shows investors still believe in 87% the probability that the institution will make this choice at the June meeting.
Investors indeed seem to think that the American institution will have no choice but to raise its rates more quickly to stem inflation. And this even if a sudden monetary tightening could cause a slowdown in the global economy, or even a recession.
The market will follow at 12:30 GMT the publication of monthly employment figures in the United States. Job creation should have fallen in April according to the Reuters consensus, which expects 391,000 jobs created after 431,000 in March.
“The trend is still for a strong and very tight labor market, which is fueling wage increases and posing a problem for longer-term inflation,” said Gergely Majoros, member of Carmignac’s investment committee.
VALUES IN EUROPE
Unwelcome corporate results also weigh on the trend in Europe: JCDecaux falls 9.99% after reporting a sales forecast for the second quarter below expectations and Adidas loses 6.35% after having lowered its full-year outlook due to health restrictions in China.
Dutch bank ING lost 3.58% after lower than expected net profit in the first quarter, a result which takes into account an increase in provisions for bad debts linked to its exposure to Russia and Ukraine.
In London, IAG, which owns British Airways in particular, fell 7.61% after announcing a larger-than-expected quarterly operating loss and downgrading its plan to increase short-haul flight capacity in London. Heathrow airport.
RATE
The yield on ten-year Treasuries is up slightly to 3.0927% after briefly crossing the 3.1% threshold, already exceeded on Thursday for the first time since November 2018.
In Europe, the spread between Italian and German ten-year yields rose to more than 200 basis points for the first time since May 2020, as the market feared the impact of the European Central Bank’s expected monetary tightening on countries. the most indebted in the euro zone.
Several members of the institution have called in recent hours for action by the ECB in the face of rising prices: Robert Holzmann said he was in favor of a rate hike in June, François Villeroy de Galhau mentioned a return to the rate of deposit in positive territory before the end of the year and Joachim Nagel judged that the window of opportunity for an ECB initiative was shrinking.
The ten-year German Bund yield hit its highest since September 2014, at 1.096%, and its French equivalent peaked since July 2014 at 1.621%.
CHANGES
The dollar is losing ground against a basket of benchmark currencies after hitting a new high in almost 20 years in session.
The euro gained 0.42%, around 1.0584 dollars, driven among other things by statements by the Governor of the Banque de France.
The depreciation of the pound sterling continues in the wake of monetary policy announcements from the Bank of England, which warned of the risk of recession and indicated that inflation could exceed 10% this year: against the greenback, the British currency hit a new low since June 2020 at $1.2273.
OIL
Oil prices are trending higher for the third consecutive session, as supply concerns in the event of a European embargo on Russian imports currently outweigh uncertainties related to global economic growth.
Brent rose 2.02% to 113.14 dollars a barrel and American light crude (West Texas Intermediate, WTI) gained 1.98% to 110.4 dollars.
(Laetitia Volga with Carolyn Cohn in London, editing by Marc Angrand)