Attention Should Limit Gaps Before US Employment – 07/10/2022 7:34 am

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Overview of the interior of the Amsterdam Stock Exchange

PARIS (Reuters) – Major European equity markets are expected to fall on Friday, but changes are expected to remain subdued until the release of monthly US employment data, a key element of the debate over the magnitude of upcoming rate hikes.

Index futures suggest a decline of 0.36% for the Frankfurt Dax, 0.26% for the London FTSE 100 and 0.47% for the EuroStoxx 50. As for the CAC 40 in Paris, according to the first indications available, it could fall by around 0.3%. .

The Parisian market was up 3.02% since the start of the week and the European Stoxx 600 general index gained 2.19%. But the final assessment of the week will largely depend on the markets’ reaction to the US Department of Labor’s monthly report, scheduled for 12:30 GMT.

Job creation in the United States was expected to slow in September, to 250,000 versus 315,000 in August, but wage growth is expected to remain above 5% over a year, according to the Reuters consensus.

Without waiting, several Federal Reserve officials also stressed on Thursday the need to continue raising interest rates. Among them, the new governor, Lisa Cook, highlighted inflation which remains “stubbornly and unacceptably high”.

The markets now estimate the probability of a further 75 basis point hike in the fed funds rate target on November 2 at the end of the next meeting of the US central bank at 85%.

Technology stocks could also be penalized by below-expectations results from US Advanced Micro Devices and South Korea’s Samsung Electronics.

The latter posted an estimated quarterly operating profit down 32%, and AMD presented a quarterly revenue forecast that was about $ 1 billion lower than the previous one.

The start of the session in Europe could be driven by German industrial production statistics the day after the below-expectations data for industrial orders.

A WALL STREET

On Thursday, the New York Stock Exchange recorded a second consecutive session of declines in an environment still burdened by rising bond yields, Fed tightening of monetary policy and fears of recession.

The Dow Jones Index fell 1.15%, or 346.93 points, to 29,926.94, the Standard & Poor’s 500 dropped 38.76 points, or 1.02%, to 3,744.52 and the Nasdaq Composite fell 75,327 points (-0.68%) to 11,073,311.

Ten of the eleven S&P sector indices closed in the red, starting with real estate, which lost 3.3%. Only the energy sector grew by 1.8%, thanks to the increase in crude oil prices.

In non-session trading after the close, AMD fell 4% in reaction to its results and lead.

Futures so far suggest a downward opening of around 0.2%.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei Index lost 0.77% less than an hour after closing after four sessions of highs, as tech stocks dragged the market lower after results below AMD’s expectations. and Samsung.

In mainland China, markets remain closed and will not reopen until Monday. In Hong Kong, the Hang Seng fell by 1.26% and the local “tech” index by 2.93%.

CHANGES

Backed up at the start of trading by statements from Fed officials, the dollar has almost returned to equilibrium against the other major currencies (-0.05%) as traders avoid taking positions ahead of the employment statistics.

The euro rallied some fractions, but struggled to sustainably rise above $ 0.98.

RATE IT

US Treasury yields are virtually unchanged in Asian trading, at 3.8246% for the 10-year and 4.2597% for the two-year.

They ended abruptly on Thursday despite the announcement of a sharp increase in jobless claims last week, which is explained in particular by the impact of Hurricane Fiona in Puerto Rico.

OIL

The price of oil is slightly lower after benefiting from the decline in the dollar at the beginning of the day.

Brent was down 0.25% to $ 94.18 a barrel and US light crude (West Texas Intermediate, WTI) by 0.25% to $ 88.23.

WTI rose in early trading to $ 89.37, the highest level since September 14. It has gained 11% since the beginning of the week, Brent just over 7%.

(Written by Marc Angrand)

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