A trader in Brussels, Belgium
by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to see slight variations on Friday and European stock markets are moving cautiously in the green mid-session after the publication of inflation figures in the euro zone and before data on consumption by American households and the PCE price index, a statistic closely watched by the US Federal Reserve (Fed). At the start of the last session of a quarter that began in euphoria before the emergence of a banking crisis in early March, futures on New York indices are signaling a Wall Street opening up 0.27% for the Dow Jones, 0.16% for the Standard & Poor’s 500 and stagnation for the Nasdaq. In Paris, the CAC 40, which has gained 12.31% over the quarter at this stage, takes 0.53% to 7,301.7 points around 11:05 GMT. In Frankfurt, the Dax advances by 0.38% and in London, the FTSE gains 0.25%.
The pan-European FTSEurofirst 300 index gained 0.47% and the euro zone’s EuroStoxx 50 0.38%. The Stoxx 600, which is heading for a quarterly gain of 7.47%, is up 0.4%.
Investors will take notice at 12:30 GMT of February’s US household income and spending figures, which include the PCE price index. In its “core” version, i.e. excluding energy and food products, this inflation indicator favored by the Fed is given by the Reuters consensus as a deceleration of 0.4% over one month (against + 0.6% in January) and an increase to 4.7% over one year, as in January.
In the euro zone, headline inflation posted its most marked slowdown in March, to +7.1% after +8.5% over one year, but excluding volatile elements, the rise in prices increased, according to Eurostat’s first estimate. In the wake of figures published Thursday in Germany and Spain, inflation in France harmonized with European standards slowed in March to 6.6% over one year, but food prices accelerated.
In terms of the economy, the unemployment rate in the euro zone remained stable in February, at 6.6% of the working population, while Great Britain narrowly escaped a recession in the fourth quarter. with a growth of 0.1%. Retail sales in Germany fell against all expectations in February, by 1.3% over one month, and in France, household consumption fell by 0.8% in February. In the United States, consumer spending, which represents more than two-thirds of economic activity, should have increased by 0.3% in February after a jump of 1.8% in January.
These mixed data leave analysts perplexed as the stock market indices rose sharply over the quarter as a whole, particularly in the technology compartment, which has gained more than 19% since the start of the year on both the S&P-500 and the Stoxx. 600, hoping for a lull in the cost of credit.
“What lies ahead is tricky. Our forecasts for economic growth and interest rates vary widely,” said HSBC’s Willem Sels, saying the market will need to reassess the prospect of less restrictive central bank policy in light of underlying inflation data.
Two Fed officials, John Williams and Lisa Cook, are due to speak on Friday while a speech by Christine Lagarde, President of the European Central Bank (ECB) is expected at 3:00 p.m. GMT, on the occasion of a event organized in Florence.
VALUES IN EUROPE
Among the main compartments of the European quotation, stocks linked to consumption (+1.6%) are particularly sought after. Carrefour takes 2.24% on the CAC 40, while H&M still gains 2.21% the day after a jump of 16% linked to its results, several intermediaries having raised their advice and price targets on the Swedish giant.
The banking index, down 0.38%, suffered from announcements by the White House in favor of a return to the regulation of small and medium-sized banks.
In other sectors, ABB gained 1.46% in reaction to the announcement of a new share buyback plan, while the German Sartorius fell 5.06% after the announcement of the buyout for 2.4 billion euros from French Polyplus, a specialist in gene therapy. WALL STREET VALUES TO FOLLOW
CHANGES
The dollar is up 0.31% against a basket of benchmark currencies but at this stage is down 1.2% over the quarter as a whole.
The euro fell 0.31% to $1.0867 but gained more than 1% over the week, heading for its best weekly performance since mid-January.
RATE
Long-term bond yields in Europe are broadly stable but short-term bond yields, the most sensitive to changes in interest rates, rise after inflation figures. The yield on the two-year German Bund takes about 4.5 points, to 2.747%, after gaining 41 points this week, its biggest weekly rise since 1990.
In the United States, the same phenomenon is observed, with the yield of two-year Treasuries gaining more than six basis points at 4.1472%, while the ten-year is practically unchanged at 3.5469%.
OIL
The oil market progressed on Friday ahead of the PCE price index in the United States which could give indications on the trajectory of rates.
Brent rose 0.42% to 79.60 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.71% to 74.90 dollars.
The two oil benchmarks, which gained almost 5% and around 7% respectively this week, are however heading towards their biggest monthly decline since November, with respective declines of 6% and 4% so far.
(Edited by Claude Chendjou, edited by Kate Entringer)
