The Palais Brongniart, former Paris stock exchange
by Claude Chendjou
The main European stock markets are expected to consolidate on Friday after the previous day’s gains linked to the prospect of an acceleration in the rate cut by the European Central Bank (ECB) and records on Wall Street while the news from China is mixed .
The session should also be driven by new corporate results while the start of the quarterly accounts season was marked by solid profits, especially across the Atlantic where banks exceeded expectations.
According to the first available indications, the Parisian CAC 40 should lose 0.38% at the opening, after having gained 1.22% the day before. The Dax in Frankfurt, which closed on Thursday at a record level at 19,674.68 points, could fall by 0.17%, while the FTSE 100 in London is expected to drop 0.52%. The EuroStoxx 50 index is expected to fall by 0.10% and the Stoxx 600 down by 0.11%.
The ECB cut its key rates on Thursday for the third time since the start of the year and sources told Reuters that its officials plan to lower borrowing costs further in December unless there is a change in economic data and the inflation in the coming weeks. The markets for their part now anticipate a decline at each ECB meeting until June 2025. Some economists, like Marc Brütsch of Swiss Life Asset Managers, even believe that the ECB is late in carrying out its monetary policy.
A marked easing of the ECB’s monetary policy would help revive economic growth in the bloc, which would benefit cyclical stocks and other financial assets.
“Eurozone small and mid-caps offer attractive value and are expected to be among the main beneficiaries of ECB rate cuts,” writes Dean Turner, chief eurozone economist at UBS Global Wealth Management.
The small caps and mid cap indices are currently at two-week highs.
On the indicator side of the day, retail sales in Great Britain increased against all expectations in September on a monthly basis, by 0.3%, while the market currently fears a slowdown in British growth after the GDP figures for the third quarter .
A WALL STREET
The New York Stock Exchange ended in mixed order on Thursday, with the Dow Jones having set a record but the S&P-500 marginally in the red.
Semiconductor manufacturers progressed in the wake of TSMC’s optimistic forecasts, while retail sales in the United States, better than expected, reassured consumption.
The Dow Jones index gained 0.37%, or 161.35 points, to 43,239.05 points.
The broader S&P-500 lost 1 point, or 0.02%, to 5,841.47 points.
The Nasdaq Composite advanced 6.53 points (0.04%) to 18,373.61 points.
The Dow Jones thus recorded its fourth closing record in five sessions, while the Nasdaq once again finished in the green.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index advanced 0.18% to 38,981.75 points, in the wake of strong retail sales published in the United States which brought the Dow Jones to a record level, reviving the optimism about the health of the American economy. The broader Topix gained 0.04% to 2,688.98 points.
In China, the Shanghai SSE Composite gained 3.32% and the CSI 300 increased by 4.78%. Indices are rising as the Chinese central bank officially launched a swap facility aimed at stimulating financial markets with an initial package of 800 billion yuan (112.38 billion dollars or 103.65 billion euros).
In terms of economic indicators, Chinese GDP grew 4.6% year-on-year in the third quarter, the weakest pace since the start of 2023, but data on consumption and industrial production exceeded expectations in September.
VALUES TO FOLLOW IN EUROPE:
CHANGES
The dollar is heading towards its third consecutive weekly increase on Friday (+0.7% at this stage), helped by an ECB seen as more accommodating than the Fed and solid American statistics. The prospect of a Donald Trump victory in the American presidential election on November 5 also supports the greenback, which reached its highest level in two and a half months against a basket of reference currencies, around 103 points.
The euro advanced 0.07%, to $1.0839, while the pound sterling GBP= traded at $1.3020 (+0.05%).
RATE
The yield on ten-year US Treasury bonds is stable at 4.0946%, after a jump of around 8 points the day before.
Traders now estimate a 73.6% chance of a 50 basis point rate cut during the Fed’s two remaining meetings this year, up from 85.6% the day before, according to the FedWatch barometer. of CME Group.
The yield on the German Bund of the same maturity rises around two basis points, to 2.22% after an increase of three points the day before.
OIL
The oil market was up on Friday but heading towards its biggest weekly loss in more than a month due to concerns over crude demand.
Brent rose 0.35% to $74.71 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.47% to $71.
Brent and WTI are expected to fall around 6% this week, their biggest weekly decline since September 2, after OPEC and the International Energy Agency cut their forecasts for global oil demand by 2024 and 2025.
(Written by Claude Chendjou, edited by Augustin Turpin)
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