by Laetitia Volga
PARIS (Reuters) – Wall Street is expected to rise and European stocks rose mid-session on Friday, with inflation concerns taking a back seat with the start of earnings releases and the prospect of a government U-turn. UK on its tax program. Futures contracts are signaling a gain of 0.62% for the Dow Jones, 0.24% for the Standard & Poor’s-500 and 0.03% for the Nasdaq. In Paris, the CAC 40 gained 1.56% to 5,971.16 around 11:35 GMT. In Frankfurt, the Dax takes 1.17% and in London, the FTSE gains 1.35%.
The pan-European FTSEurofirst 300 index rose by 1.46%, the EuroStoxx 50 of the euro zone by 1.41% and the Stoxx 600 by 1.35%.
Thursday’s release of higher-than-expected inflation in the United States reinforced the idea that the Federal Reserve will raise rates by three-quarters of a point next month, which could increase the risk of a global recession.
However, equity markets managed to end in the green, a performance that observers attribute more to short position hedges than any change in fundamentals.
“It is likely that the market rally will be relatively short-lived, given the rate hike and inflation data will only serve to maintain or even reinforce the restrictive bias of central banks,” said Michael Brown. at Caxton.
In the meantime, news across the Channel also remains in the foreground. Following reports from the Financial Times that the UK government is considering revising its much-criticized plans for massive tax cuts, The Times and BBC report that the finance minister is to be sacked.
Liz Truss, the British Prime Minister, is due to hold a press conference at 1:00 p.m. GMT.
The market will also follow the publication of September retail sales in the United States, at 12:30 GMT, but for the moment, it is the results of the big banks that are capturing the attention.
JPMorgan and Wells Fargo both posted lower quarterly earnings as banks were forced to spend large provisions against the risk of an economic slowdown.
However, they are indicated on the rise in pre-market trading, unlike Morgan Stanley, which has also just announced a declining profit.
On the mergers and acquisitions side, the Kroger supermarket chain announced the acquisition of its competitor Albertsons for 24.6 billion dollars.
VALUES IN EUROPE All European sectors rose, from the Stoxx energy index (+0.44%) to that of real estate (+3.68%).
Danone takes 1.70% despite the announcement of its withdrawal from the dairy market in Russia, which could result in impairment charges of one billion euros.
Among the biggest drops in the Stoxx 600, Swiss banking software specialist Temenos fell 18.97% after warning on its results that its customers were becoming more cautious in terms of spending.
CHANGES
The dollar appreciated against other major currencies (+0.52%), erasing its decline on Thursday.
The pound fell against the greenback but retained most of its gains from the previous day on reports that the UK government will backtrack on its controversial ‘mini-budget’.
RATE
On the British bond market, the ten-year fell by almost 20 basis points around 4% due to speculation on the government’s reversal of its economic program and the dismissal of the Minister of Finance.
“A good mood is emerging from the bond markets (…) mainly led by the United Kingdom,” said Matteo Cominetta, economist at Barings. “The mini-budget could not have been more inconsistent with the anti-inflation policies that are underway around the world.”
Yields in the euro zone follow the downward movement, at 2.215% for the ten-year German Bund and at 2.816% for its French equivalent, the vice-president of the European Central Bank, Luis de Guindos, having also warned of the risks of recession. .
The institution’s president, Christine Lagarde, said shortly after that financial markets could be pricing in an overly optimistic economic outlook, leaving them vulnerable to a possible correction.
The yield on ten-year US Treasury bonds fell six basis points to 3.9116%.
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OIL
Oil prices are in the red, penalized by fears of recession and weak demand, particularly in China.
Brent lost -1.04% to 93.59 dollars a barrel and US light crude (West Texas Intermediate, WTI) -1.2% to 88.04 dollars.
(Laetitia Volga, edited by)