by Laetitia Volga
PARIS (Reuters) – Wall Street is expected to fall and European stock markets lost ground mid-session on Friday as concerns about the economy and rising interest rates regained the upper hand, causing a sharp upsurge in risk aversion.
Futures contracts signal a decline of 0.44% for the Dow Jones, 0.3% for the Standard & Poor’s-500 and 0.6% for the Nasdaq.
In Paris, the CAC 40 is down 1.46% to 5,997.88 at 11:23 GMT. In Frankfurt, the Dax lost 1.18% and in London, the FTSE lost 0.69%.
The pan-European FTSEurofirst 300 index fell by 1.34%, the EuroStoxx 50 of the euro zone by 1.33% and the Stoxx 600 by 1.32%.
The latest inflation data and signs of tightness in the US labor market have dealt a blow to hopes of a slowdown in monetary tightening by the Federal Reserve and other major central banks in the near future.
Philadelphia Fed President Patrick Harker hinted Thursday that the central bank “will continue to raise rates for some time.”
“Given our frankly disappointing lack of progress in bringing inflation down, I expect we will be well above 4% by the end of the year,” he said. he says in reference to the federal funds rate target.
RATE
These comments are fueling the rise in US bond yields: that of ten years has peaked since December 2007 at 4.291%.
Its German equivalent, up ten basis points, hit its highest level in more than 11 years at 2.512% as markets expect another sharp rate hike from the European Central Bank next Thursday.
VALUES IN EUROPE
Company results are of no help to market sentiment.
The quarterly performances of L’Oréal (-5.27%) and Kering (-3.82%) were not convincing.
Vivendi dropped 3.82% after posting a decline in sales of the Canal+ television group, its main division.
German sportswear maker Adidas fell 9.25%, the bottom of the Stoxx 600, after lowering its outlook for the full year on weaker demand.
On the rise, Deliveroo gains 2.51% after raising its adjusted EBITDA margin target.
Sector-wise, the European retail index fell 3.62%, the biggest drop, as the fall in UK retail sales in September was larger than expected.
WALL STREET VALUES TO FOLLOW
In the United States, Snap lost more than a quarter of valuation in the market after posting its weakest quarterly sales growth in five years on Thursday.
In its wake, Alphabet, Twitter, Meta Platforms and Pinterest fell from 1.8% to 7.4% in pre-market trading.
CHANGES
The index which measures the fluctuations of the greenback against a reference basket gains 0.52% and the euro falls to 0.9754 dollars.
The yen, on course for its tenth consecutive weekly decline against the dollar, is trading at a new low since 1990 at 151.46 to the dollar, increasing pressure on authorities for urgent intervention in currency markets.
The British pound falls about 2% against the dollar due to the deep political crisis in the United Kingdom.
OIL
The oil market is on the rise again: Brent lost 0.45% to 92.8 dollars a barrel and American light crude (West Texas Intermediate, WTI) 0.44% to 84.88 dollars.
(Written by Laetitia Volga)