STOCK MARKET AND EURO UP, ECB AND CHINA IN SUPPORT
PARIS (Reuters) – Wall Street is expected to rise and European shares advanced more than 1% mid-session on Friday, erasing their losses from the start of the week thanks to a rally in mining and bank shares, while the euro continues to benefit. of the rise in rates by the European Central Bank (ECB) and the withdrawal of the dollar.
Futures contracts on major New York indices point to a rise of 0.8% for the Dow Jones, 0.86% for the Standard & Poor’s 500 and 1.13% for the Nasdaq.
In Paris, the CAC 40 gained 1.66% to 6,227.52 points around 11:15 GMT, the highest since Aug. 31. In London, the FTSE 100 is up 1.53% and in Frankfurt, the Dax is up 1.43%.
The EuroStoxx 50 index rose 1.75%, the FTSEurofirst 300 1.52% and the Stoxx 600 1.53%.
The latter currently shows a weekly increase of close to 1% and the CAC 40 a gain of 0.9%, while the first sessions of the week had been dominated by fears of recession linked to the energy crisis.
This change in trend is favored, among other things, by the announcement of an unexpected slowdown in inflation in China, which could favor further stimulus measures.
In Europe, the fight against inflation continues to be at the forefront of investors’ concerns after the monetary policy decisions and the ECB press conference. Especially since the statements of various officials of the institution fuel speculation about the possibility of a new rate hike of three quarters of a point in October.
“The 75 basis point rate hike and accompanying ‘hawkish’ rhetoric underscores the new sense of urgency that has gripped the ECB,” analysts at Commerzbank said in a note.
Investors are also awaiting the conclusions of the ongoing European Union energy ministers meeting in Brussels.
VALUES IN EUROPE
The European commodity compartment recorded the strongest sector advance of the day with a gain of 3.81%, thanks to the rebound in base metals (+2% for copper +6.6% for nickel), linked to the revival of hopes in China.
Bank shares (+2.32%) continue to benefit from the ECB’s announcements, which should allow them to improve their credit spreads.
In Paris, Societe Generale (+3.49%), BNP Paribas (+3.38%) and Crédit Agricole (+2.48%) appear, like on Thursday, in the leading pack of the CAC 40.
US government bond yields fell to 3.262% for ten-year notes and 3.4692% for two-year notes. They thus erase a small part of the rise registered on Thursday in response to Jerome Powell’s statements reaffirming the Federal Reserve’s determination to reduce inflation.
In the euro zone, the sharp rise in rates that began on Thursday after the ECB’s announcements (rate hikes such as the new deposit remuneration rules), which continued at the beginning of the session, ended up being interrupted.
The German two-year bond thus returned to 1.295% after having reached its highest level since 2011 at 1.429% and the ten-year bond fell to 1.692% after a maximum of almost three months at 1.796%.
CHANGES The dollar fell sharply against the other major currencies (-0.95%) and is headed for a negative weekly performance after three weeks of strong growth.
Its fall is explained by statements by Japanese officials suggesting a possible intervention in support of the yen and by the People’s Bank of China fixing the yuan on the rise, but above all by the hardening of the ECB’s tone on Thursday, accentuated by statements of several of its officials on Friday.
The euro thus gained 0.67% against the dollar at 1.0061 after hitting a high of 1.0112, its highest level since August 18.
In the oil market, the beneficial effect of the dollar’s fall adds to fears of new supply tensions in the event of a halt in Russian exports to the West.
Brent gained 1.94% to $90.88 a barrel and US light crude (West Texas Intermediate, WTI) 1.92% to $85.14.
However, both are headed for a weekly drop of more than 2%, due to fears of a deterioration in global demand.
(Written by Marc Angrand)
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