PARIS (Reuters) – European equities rose in the final session of a week marked by growing concerns over the pace of central bank monetary tightening and slowing economic growth, with Wall Street expected to rise at the open.
The futures contracts are proposing a rise of 0.73% for the Dow Jones, 1.09% for the Standard & Poor’s-500 and 1.64% for the Nasdaq. In Paris, the CAC 40 is taking 1.59% at 6,304.91 at around 11:25 GMT. In Frankfurt, the Dax was up 1.47% and in London the FTSE was up 1.62%.
The pan-European FTSEurofirst 300 index rose 1.35%, Eurozone EuroStoxx 50 1.53% and Stoxx 600 1.39%.
Fed Chairman Jerome Powell said on Thursday evening that the fight against inflation will not be painless, while reiterating that the institution expects rate hikes by half a percentage point for the next two monetary policy meetings.
These statements, which seem to contribute to the recovery of battered world markets this week, are investors who fear the world economy will fall into recession under the blow of the central banks’ drastic tightening of monetary policies in the face of inflation, but they are also reflections of the war in Ukraine and the health crisis in China.
On this last point, the latest news is quite encouraging: Shanghai authorities have stated that they are aiming for a “zero COVID” situation at the community level in the coming days, after which they will begin to gradually lift health restrictions.
Currently, the Stoxx 600 is showing a weekly gain of 0.1%, allowing it to interrupt a four-week bearish cycle in a row.
Twitter action fell nearly 20% in transactions prior to the Wall Street opening, when Elon Musk announced that his plan to buy the social network for $44 billion (42.4 billion euros) was temporarily put on hold pending the clarification of spam and fake accounts.
VALUES IN EUROPE
All industry segments are green in Europe, from the Stoxx real estate index (+0.42%) to transport and entertainment (+2.98%).
All components of the CAC 40 are moving forward. At the top of the Paris index, Eurofins Scientific, STMicroelectronics and Renault rose from 3.69% to 4.24%.
CURRENCY In the foreign exchange market, the “dollar index”, which measures the dollar’s development against a reference basket, is stabilizing after a bounce of over 1% during the week and an almost two-year high on Thursday.
The euro has also changed little, at $1.0388 the day after 1.0352, the lowest since January 2017.
MUFG analyst Lee Hardman speculates that the single currency could come under pressure in the coming weeks and possibly fall below the pair, citing specifically the war in Ukraine and monetary tightening in the US, which promises to be faster than in the eurozone.
Bitcoin is up 5% after hitting a 16-month low the previous day.
RATIOS Government bond yields are rising after falling sharply over the past few days. Ten-year Treasuries rose 8.7 basis points to 2.904 percent, while the German equivalent rose three points to 0.899%.
The oil market has risen sharply but has recovered only a small part of the ground it had lost in previous sessions and is heading towards negative weekly performance after two weeks of progress, a sign that fears over global demand still dominate the sanctions-related risk against Russia.
Brent rose 1.75% to $109.33 a barrel, while US light crude (West Texas Intermediate, WTI) rose 1.71% to $107.95 a barrel.
(Written by Laetitia Volga, Edited by Kate Entringer)