Wall Street expected to fall before inflation, Europe in disarray

by Augustin Turpin

(Reuters) – Wall Street is expected to be in the red at the opening on Friday and European stock markets are hesitant at mid-session after higher than expected inflation figures in the euro zone and while the markets are still awaiting the publication of the PCE inflation for May in the United States. New York index futures signal Wall Street opening down 0.18% for the Dow Jones, 0.31% for the Standard & Poor’s-500 and 0.48% for the Nasdaq.

In Paris, the CAC 40 fell by 0.15% to 7,966.56 around 11:00 GMT and, in Frankfurt, the Dax lost 0.2%, while in London, the FTSE rose by 0.29%.

The pan-European FTSEurofirst 300 index gained 0.03%, the EuroStoxx 50 of the euro zone lost 0.05% and the Stoxx 600 0.01%.

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European indices continue the session in disorganized order after the publication of inflation figures in the euro zone, which revealed a greater increase than expected in May.

Although highly anticipated, the indicator should not call into question the next rate cut by the European Central Bank, scheduled for its next meeting on June 6. However, this surprise increase could call into question the continuation of the monetary trajectory.

Investors will focus at 12:30 GMT on the publication of PCE inflation figures in the United States for the month of May, the Federal Reserve’s favorite indicator of price dynamics, faced with persistent inflation which has pushed the prospect of rate cuts in 2024.

The pace of growth of the indicator is expected to be stable, up 2.7% year-on-year in May, as in April. VALUES TO FOLLOW AT WALL STREET

The cybersecurity group ZScaler takes 14% in pre-market trading after announcing that it expects turnover and profit above consensus for the fourth quarter.

On the downside, chip manufacturer Marcell Technology lost 4% in pre-market trading after reporting on Thursday a first quarter turnover lower than consensus.

VALUES IN EUROPE

The travel and leisure compartment led the decline in Europe (-0.3%), weighed down by the fall in Flutter shares, down 2.6% after plunging up to 7.8%, with markets having poorly received the announcement by the largest online betting group of the appointment of a new financial director.

Neoen soars by 20.45%, its trading having been suspended on Thursday after the Canadian Brookfield revealed its plan to buy the group.

Capgemini declines by 5.6% after a reduction in recommendation from JPMorgan and Jefferies.

RATE

Bond yields in the Eurozone are rising, with the German Bund hitting a six-month high after the publication of Eurozone inflation figures.

The German ten-year yield gained one basis point (bp) to 4.5640%.

For its part, the US Treasury rate of the same maturity gained 5.1 bp to 2.7060%.

CHANGES

Like European bond yields, the euro rose against the dollar after the inflation data. The single currency gained 0.13% to 1.0847 dollars.

The greenback is stabilizing against a basket of reference currencies after falling sharply on Thursday, with currency traders positioning themselves ahead of PCE inflation.

OIL

Crude prices are falling, while figures from the Energy Information Administration showed that diesel stocks had increased last week, raising fears that demand would be weaker than expected this summer in the United States.

Brent dropped 0.56% to $81.40 per barrel and American light crude (West Texas Intermediate, WTI) lost 0.1% to $77.83.

MAIN ECONOMIC INDICATORS ON THE AGENDA OF MAY 31:

COUNTRY GMT INDICATOR PERIOD PREVIOUS CONSENSUS

US 12:30 PCE inflation May 0.3% 0.3%

-over one year 2.7% 2.7%

-Consumer spending 0.3% 0.8%

(Written by Augustin Turpin, edited by Blandine Hénault)