by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to fall on Friday and European stock markets are down mid-session, the trend being weighed down by the latest announcements from central banks and mixed economic indicators which are raising fears of a recession. Futures on New York indices signal an opening on Wall Street down 1.06% for the Dow Jones, 0.95% for the Standard & Poor’s 500 and 0.54% for the Nasdaq. In Paris, the CAC 40 fell by 1.11% to 6,450.47 points around 12:50 GMT. In Frankfurt, the Dax lost 0.34% and in London, the FTSE lost 1.41%.
The pan-European FTSEurofirst 300 index fell by 1.07%, the EuroStoxx 50 in the euro zone by 0.77% and the Stoxx 600 by 0.94%.
Over the week as a whole, the CAC 40 is down 3.43% at this stage and the Stoxx 600 is down 3.04%.
The US Federal Reserve (Fed) has chilled investors since Wednesday by hinting that its interest rates will remain high for an extended period, at the risk of a recession.
The European Central Bank (ECB), for its part, stressed on Thursday that the tightening of its policy should be prolonged as its new economic forecasts showed that price inflation in the euro zone could remain above 2% until 2025. Olli Rehn, one of the ECB’s Governing Council members, said on Friday that the institution could hike rates another 50 basis points in February and March as euro zone inflation was revised. to 10.1% in November over one year.
The Bank of England (BoE), for its part, warned on Thursday that further rate hikes were on the cards and the Swiss National Bank (SNB) stressed that inflation is likely to remain high in the country.
In addition to concerns about interest rates and inflation, economic statistics show that the decline in private sector activity in the euro zone has eased with a composite PMI index at 48.8 in December after 47.8 in November , but it remains below the threshold of 50 separating contraction and expansion. In Great Britain, the “flash” composite PMI index fell from 48.2 to 49.0 in December, thanks mainly to services while industry is again struggling.
“Beyond inflationary pressures, there is a growth issue,” summarizes Giuseppe Sette, president of the investment platform Toggle.
“There is a consensus clearly emerging that recession risk is a concrete risk for next year. If we have a severe recession next year, earnings will fall and valuations will be unsustainable. “, he adds.
The PMI indices in the United States for the month of December will be published at 14:45 GMT.
WALL STREET VALUES TO FOLLOW
Adobe jumped 6.5% in pre-market after raising its forecast for adjusted earnings per share for the first quarter.
VALUES IN EUROPE Most of the major compartments of the European stock market are in the red, the sharpest fall being in the assets of real estate (-3.15%), the most exposed to a continuation of monetary tightening, while banks (+0.15%) are one of the few growing sectors.
Unibail-Rodamco-Westfield fell 3.01% and BNP Paribas advanced 0.38%.
In business news, Tele2 down 1.71% weighs on the telecoms sector (-1.72%) after the lowering of the Swedish operator’s price target by Citigroup.
The British publisher Games Workshop jumped 14.86% after an agreement in principle with Amazon to adapt the battle game “Warhammer 40,000” to cinema and television.
CHANGES
The dollar catches its breath after the strong rise of the previous day, yielding 0.02% against a basket of reference currencies.
The euro is also stable at 1.0622 dollars (-0.05%) after reaching its highest level in six months at 1.0735 on Thursday.
RATE
Bond yields in Europe are supported by the upward revision of ECB rate expectations, François Villeroy de Galhau, member of the institution’s board of governors, having notably declared that the match against inflation in the euro zone n wasn’t finished.
The ten-year German Bund yield, a benchmark for the entire euro zone, jumped more than ten basis points, to 2.18%, and the two-year yield, the most sensitive to rate changes, takes 10.1 points, to 2.47%.
In the United States, the yield on ten-year bonds rose by 4.7 basis points, to 3.49%, and that to two years by just over one point, to 4.25%.
OIL
Oil prices were penalized on Friday by concerns about interest rates but should record strong weekly growth over the whole week.
Brent fell 2.36% to 79.29 dollars a barrel and American light crude (West Texas Intermediate, WTI) by 2.38% to 74.3 dollars.
(Written by Claude Chendjou, edited by Blandine Hénault)