European stocks are expected to open sharply lower

(ABM FN-Dow Jones) European stocks are set to open sharply lower on Friday after Russia launched an attack on a nuclear power plant in Ukraine and a fire broke out. The fear of a nuclear disaster is mounting.

IG forecasts an opening loss of 339 points for the German DAX, a minus of 158 points for the French CAC 40 and a decrease of 97 points for the British FTSE 100.

European stocks closed lower on Thursday. Shares fell yesterday in response to statements by Fed Chair Jerome Powell on monetary policy, while the market closely watched developments surrounding Russia’s invasion of Ukraine.

Powell said before a House committee on Wednesday that the Fed will raise interest rates in March, despite the uncertainties created by the invasion of Ukraine. On Thursday, the Fed chairman repeated that message in the Senate.

The minutes of the last policy meeting of the ECB revealed that central bank policymakers are concerned about surprisingly high inflation. The ECB stated that the upward movement in inflation is still mainly the result of high energy prices and concluded at the time that there were no first signs of continued high inflation because of “higher wage growth and further upward movements in inflation expectations would be necessary.”

Next week, the ECB will release a new interest rate decision, along with new inflation estimates that may pave the way for an earlier-than-expected monetary tightening.

ING economist Carsten Brzeski sees an “increasing willingness to normalize policy in March.” According to market experts, the situation in Ukraine is an uncertain factor.

Meanwhile, chaos in commodity markets continues due to conflicts in Eastern Europe, with crude oil prices rising again. Oil was stable around the European close on Thursday around the highest level since 2008 and thus well above 100 dollars.

While Western sanctions against Russia leave the energy market untouched, severe financial sanctions against Moscow have led traders to self-impose and leave supplies from Russia untouched for fear of violating regulations.

“The panic in the oil markets continues and prices are rising aggressively again,” said Oanda market analyst Jeffrey Halley. “Even if Western sanctions seem to allow energy payments to go through, Western financial institutions are not taking any risk.”

The European purchasing managers’ indices for the services sector showed less growth in the second measurements than in the first estimates. The purchasing managers’ index for the services sector came in at 55.5 in February, compared to 51.1 in January. The preliminary measurement reported an index of 55.8.

Company news

Merck recorded more turnover and a higher result in 2021. That left room for a dividend increase. The share price was about 1.3 percent higher.

The London Stock Exchange exceeded its own growth target in 2021 and expects to gain more cost synergies from the acquisition of Refinitiv. The stock rose nearly 10.0 percent.

Lufthansa expects to carry more passengers this year after its loss declined in the fourth quarter. The stock lost about 8 percent.

In Paris, Thales led the way with a profit of more than 4.0 percent, BNP Paribas gained more than 1.0 percent and AX rose about 1.0 percent. Publicis Groupe was the strongest faller with a loss of approximately 6.5 percent.

Merck was the only climber in Frankfurt. RWE lost about 8.5 percent, Delivery Hero fell about 7.5 percent and Mercedes was down about 6.0 percent.

Euro STOXX 50 3,741.78 (-2.1%)
STOXX Europe 600       437,36 (-2,0%)
DAX                    13.698,40 (-2,2%)
CAC 40 6,378.37 (-1.8%)
FTSE 100 7,238.85 (-2.6%)
SMI 11,675.70 (-1.7%)
AEX                    705,42 (-2,2%)
BEL 20 3,874.66 (-2.1%)
FTSE MIB               23.958,83 (-2,4%)
IBEX 35                8.011,40 (-3,7%)

US EQUITIES
Wall Street opens lower Friday, according to US futures.

US stocks closed lower on Thursday.

Investors remained focused on the Russian invasion of Ukraine and the ongoing rise in commodity prices, amid fears that the rise is likely to affect already high inflation and the Federal Reserve’s monetary policy.

Fed Chair Jerome Powell said on Wednesday that he would propose a quarter of a percentage point rate hike at the central bank meeting in two weeks, despite the uncertainties created by the invasion of Ukraine. On Thursday, the Fed chairman repeated that message in the Senate.

The oil price rose to more than $115 a barrel for the first time since 2008, as refineries refuse to buy Russian oil, which reduces global energy supplies. Investors are concerned that a prolonged increase in oil prices could precede a slowdown in growth and higher inflation, known as stagflation.

April futures for a barrel of West Texas Intermediate crude eventually closed 2.6 percent on Thursday, lower at $107.67 on the New York Mercantile Exchange. Thursday’s drop may just be a pause to more new multi-year highs, according to market followers.

“The inflationary impact of oil and natural gas price increases is clear. Inflation will become more persistent. Interest rates will be pushed up by central banks worried about inflation and that will hurt growth,” said Brooks Macdonald’s market analyst Edward Park. “Stagflation is the major concern for 2023,” he added.

On a macroeconomic level, it was announced that the number of first-time jobless claims in the US fell more than expected last week. The number of new applications for unemployment benefits fell by 18,000 to 215,000. Economists had previously expected 225,000 new applications.

Labor costs rose 0.9 percent in the fourth quarter, from a previously reported 0.3 percent increase, while productivity rose 6. percent.

Two purchasing manager indices for the services sector showed a mixed picture. According to Markit Economics, the US services sector grew much faster in February. The index rose from 51.2 to 56.5 in February. According to ISM, there was actually a slowdown in growth. The index fell to 56.5 from 59.9 in January.

Factory orders rose 1.4 percent month-on-month in January, after a 0.7 percent gain in December.

On a macroeconomic level, the US jobs report for February is on the agenda in the United States on Friday.

Company news

Retailer Best Buy recorded lower sales and profits in the fourth quarter of 2021 due to limited inventories, staff shortages and lower online sales and expects sales to continue to decline in the coming financial year. The share nevertheless rose more than 9.0 percent, because the profit was above expectations and the dividend was increased by more than a quarter.

Snowflake lost about 16.7 percent after a poorly received quarterly update. In particular, the cloud computing company’s warning that growth will slow this year probably disappointed investors.

Shares of supermarket chain Kroger rose more than 10.0 percent on better-than-expected results and a strong outlook.

S&P 500 index              4.363,49 (-0,5%)
Dow Jones index            33.794,66 (-0,3%)
Nasdaq Composite           13.537,94 (-1,6%)

ASIA
Asian stocks were lower on Friday.

Nikkei 225                     25.943,88 (-2,4%)
Shanghai Composite      3.450,93 (-0,9%)
Hang Seng 21,914.04 (-2.5%)

EVALUATE
The euro/dollar traded at 1.1026. When the US markets closed on Thursday, the currency pair still moved at 1.1062 and at the close of the European markets there was still a position of 1.1047 on the plates.

USD/JPY Yen   115,45
EUR/USD Euro   1,1026
EUR/JPY Yen   127,31

MACRO-AGENDA:
08:00 Trade Balance – January (Ger)
11:00 Retail sales – January (eur)
11:00 Retail Sales – January (Call)
14:30 Job growth and unemployment – February (US)

COMPANY NEWS:
– No agenda items

Bron: ABM Financial News

From Beursplein 5, the editors of ABM Financial News keep a close eye on developments on the stock exchanges, and the Amsterdam stock exchange in particular. The information in this column is not intended as professional investment advice or as a recommendation to make certain investments.

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