Rebound in sight in Europe ahead of US jobs report.

Rebound in sight in Europe ahead of US jobs report.


THE MAIN EUROPEAN STOCK MARKETS ARE EXPECTED ON FRIDAY

by Claude Chendjou

PARIS (Reuters) – Major European stocks, which posted five straight sessions in the red linked to concerns about inflation and interest rates, are expected to rise at the open on Friday after rallying the day before. the Dow Jones and the S&P-500 and prior to the release of the US Department of Labor’s monthly report on employment, unemployment and wages.

Index futures suggest a rise of 1.3% for the Frankfurt Dax, 0.69% for the London FTSE 100 and 1.19% for the EuroStoxx 50.

However, the trend should remain cautious ahead of the release of the US employment report at 12:00 GMT. Investors have been looking for signs that the US Federal Reserve (Fed) may be changing its strategy since its chairman, Jerome Powell, warned last week that higher interest rates would be sustainable in the face of record inflation. .

The Reuters consensus forecasts 300,000 job creations in August after 528,000 in the previous month, an unemployment rate unchanged at 3.5% and a slowdown in the average wage increase to 0.4% after +0.5 % of July.

“The most recent data confirms that the labor market remains strong … even with 200,000 to 250,000 jobs, it is still a very strong labor market to reduce inflation and that only indicates that the Fed still has manpower,” said Ronald Temple, head of US Equities at Lazard Asset Management.

Markets are now pricing in a 75% chance of a third straight Fed rate hike of 75 basis points this month versus a 69% chance the day before. They also believe that these could peak at 3,977% in March 2023.

In Europe, the markets have also revised upwards expectations of a rate hike by the European Central Bank (ECB) next week, discounting with a probability of almost 80% a rise in the cost of credit of three quarters of a point , while the latest data on manufacturing activity in the region showed a further contraction in August, a sign of a higher risk of recession.

VALUES TO FOLLOW:

ON WALL STREET

The New York Stock Exchange closed this Thursday with a scattered order pending the publication of the monthly report on employment in the United States.

The Dow Jones Industrial Average rose 0.46% to 31,656.42 points, the broader S&P-500 advanced 0.30% to 3,966.85 points, while the Nasdaq Composite fell 0.26% to 11,785.13 points. .

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index lost 0.1% less than an hour after closing.

In China, the Shanghai SSE Composite gained 0.28%, while the CSI 300 lost 0.22%.

CHANGES

The dollar, which hit a new 20-year high on Thursday against a basket of benchmark currencies, was almost flat on Friday (-0.073%).

However, it continues to rise against the yen at 140.34 (+0.1%) after hitting a 24-year high the previous day.

The euro, which rose 0.23% to $0.9967, remains trading below par with the US currency.

SPEED

The two-year US Treasury bond yield fell slightly, 1.5 points, to 3.506% after rising to a 15-year high of 3.551% and the ten-year yield came in at 3.257% after closing at 3.265 %.

Bond yields in Europe ended higher on Thursday, benefiting from revised expectations of an ECB rate hike next week: the 10-year German Bund gained more than three basis points to 1.56%. .

OIL

Oil prices rise again on Friday but could post their biggest weekly drop in four weeks for the entire week. They fell about 3% on Thursday due to new health restrictions in China and fears of a deterioration in the global economy.

Brent rose 1.94% to $94.15 a barrel and US light crude (West Texas Intermediate, WTI) rose 2% to $88.34 a barrel.

(Some data may show a slight change)

(Written by Claude Chendjou, edited by Matthieu Protard)

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