A rebound is looming in Europe despite doubts


Archive photo of the Euronext stock exchange in the La Défense district of Paris

by Laetitia Volga

PARIS (Reuters) – The main European stock markets are expected to rise on Friday at the opening after losing ground the day before with the return to the fore of fears of recession and monetary tightening.

Futures contracts on indices give an increase of 0.62% for the CAC 40 in Paris, 0.49% for the Dax in Frankfurt, 0.47% for the FTSE in London and 0.54% for the Euro Stoxx 50.

Despite this expected rebound, the main indices are heading down over the week as a whole. The CAC dropped 1.86% on Thursday, finished below 7,000 points for the first time in eight days and is currently down 1.02% over the week.

Fears over the pace of Fed monetary policy tightening were bolstered by strong US jobs data and several speeches from central bank officials.

Boston Fed President Susan Collins echoed the words of some of her peers by saying she was in favor of rates going beyond 5%, while the markets see the “ceiling” at 4.89. % in June, and the institution’s vice president, Lael Brainard, said that despite the recent moderation in inflation, “(monetary) policy will have to be tight enough for a while.”

“For a ‘dove’ like Brainard to come out and say we still need higher rates, it underscores the idea that the Fed really wants to deliver the 75 basis points of rate hikes it projected in December.” , said IG analyst Tony Sycamore. “The labor market is just a little too dynamic to back down.”

VALUES TO FOLLOW:

AT WALL STREET

The New York Stock Exchange ended lower on Thursday after the release of data indicating a tight labor market in the United States, raising fears that the Fed will maintain its aggressive policy of rate hikes.

The Dow Jones index fell 0.76%, or 252.40 points, to 33,044.56 points, the S&P-500 lost 30.01 points, or 0.76%, to 3,898.85 points and the Nasdaq Composite fell 104.74 points (-0.96%) to 10,852.27 points.

This is a third consecutive session in the red for the S&P-500 and the Dow Jones.

In aftermarket trading, Netflix gained 6% after announcing a better-than-expected quarterly subscriber gain and the departure of co-founder Reed Hastings as chief executive.

Futures are signaling a Wall Street open of 0.14% to 0.57%.

IN ASIA

In Tokyo, the Nikkei gained 0.56%, supported by the good orientation of American “futures” on the one hand and by the fall in the yen on the other.

Chinese stocks rose although trading volumes were weak ahead of the Lunar New Year holiday. The CSI 300 index gained 0.61% and the SSE Composite Shanghai 0.76%.

EXCHANGES/RATES

The dollar climbed 0.11% against the other major currencies but remained close to the seven-month low reached in the week on fears of an economic slowdown.

The euro was almost unchanged against the greenback at 1.0843 and maintained its gains from the day before following comments from members of the ECB on the continuation of a restrictive policy.

The pound widened its losses slightly after the publication of a surprise decline in UK retail sales in December.

On the bond market, the yield on ten-year US Treasury bills, at 3.4092%, is practically stable and its German equivalent gains more than two basis points at 2.079%.

OIL

On the oil market, Brent gained 0.46% to 86.56 dollars a barrel and American light crude (West Texas Intermediate, WTI) advanced 0.42% to 80.67 dollars.

(Laetitia Volga, editing by Kate Entringer)

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