by Claude Chendjou
PARIS (Reuters) – Wall Street is expected in scattered order on Friday and European stock markets are moving up cautiously mid-session in a context still marked by fears of a determination of central banks to continue monetary tightening despite signs of an accelerated deterioration in the economic situation.
New York index futures signal Wall Street opening down 0.11% for the Dow Jones while the Standard & Poor’s 500 could advance 0.23% and the Nasdaq 0.62%.
In Paris, the CAC 40 rose by 0.65% to 6,996.93 points around 12:40 GMT. In Frankfurt, the Dax gains 0.53% and in London, the FTSE grabs 0.15%.
The pan-European FTSEurofirst 300 index is up 0.24%, the Eurozone EuroStoxx 50 is up 0.54% and the Stoxx 600 is up 0.30%.
Over the week as a whole, the CAC 40 is down 0.34% at this stage and the Stoxx 600 is down 0.15%, the euphoria at the start of the year having given rise to profit taking while certain analysts note that this rally may have been exaggerated.
“The (European) market is still unprepared for the wave of pain from tightening credit conditions,” wrote Andreas Bruckner, European equity strategist at Bank of America.
In the first three weeks of 2023, the Stoxx 600 recovered almost half of its 12.9% loss in 2022 on the back of China’s reopening, lower interest rate hike expectations while the officials of the European Central Bank (ECB) like those of the American Federal Reserve (Fed) multiply the declarations pointing to a monetary tightening more important and longer than expected.
At the same time, the latest economic indicators in the United States, such as industrial production and retail sales, raise fears of a more severe recession than expected.
In today’s statistics, retail sales in the UK posted an unexpected contraction of 1% in December. Investors will take note in the United States at 15:00 GMT of data on home resales which could support the prospect of a weakening of the real estate market.
WALL STREET VALUES TO FOLLOW
Netflix jumped 6.1% in pre-market after reporting Thursday evening a quarterly gain in subscribers above expectations. The co-founder of the online video service, Reed Hastings, has also announced that he is leaving his post as general manager, handing over the controls of the group to a duo made up of his deputy and the chief operating officer.
VALUES IN EUROPE
The hope that the reopening of the Chinese economy will benefit global growth benefits basic resources (+0.24%) and energy (+0.39%) on Friday, while distribution (+1, 03%), at the top of the Stoxx 600, rebounds after having lost more than 2% the day before.
In individual stocks, LVMH and Hermès, exposed to China, gained 0.95% and 1.14% respectively.
TotalEnergies advances by 1.23%, BP by 0.37% and Eni by 0.94%.
Against the trend, Siemens Energy retreated after a lowering of its annual profit forecast due to persistent problems in the wind turbines.
The Swedish group Ericsson, weighed down by the slowdown in the American market in the fourth quarter, fell 4.75%, dragging in its wake Nokia, which dropped 1.87%.
RATE
Bond yields in Europe are being driven by the latest restrictive statements from ECB officials like Francois Villeroy de Galhau, Olli Rehn and Christine Lagarde herself.
The ten-year German Bund yield took nearly nine basis points, to 2.14%, but remained below its 11-year peak hit on January 2 at 2.569%. That of the Bund at two years gains a little more than five points, at 2.57%.
In the United States, the yield on two-year Treasury bills also rose by five points to 4.16% and that of ten years by 3.6 points, to 3.43%.
CHANGES
The dollar, a safe haven, appreciated by 0.32% against other major currencies in a context of nervousness linked to the latest American economic indicators.
The Japanese currency, which trades at 130.19 yen to the dollar, is penalized by the statements of Haruhiko Kuroda, the governor of the Bank of Japan, who assured the Davos Forum that the institution would continue its “extremely accommodating” policy.
The pound was down 0.32% at $1.2349 after a surprise drop in UK retail sales in December.
The euro is almost stable (+0.06%), at 1.082 dollars.
OIL
Oil prices are heading for a second straight week of gains, still supported by the prospect of a jump in demand from China:
Brent gained 0.27% to 86.39 dollars a barrel and US light crude (West Texas Intermediate, WTI) advanced 0.20% to 80.49 dollars.
(Written by Claude Chendjou, edited by Kate Entringer)