RISE OF THE EUROPEAN STOCK MARKET EXPECTED
by Laetitia Volga
PARIS (Reuters) – Major European stock markets are expected to rise on Friday after earnings and forecasts beat expectations from Apple and Amazon, while the US economy’s contraction for a second straight quarter continues to stoke suspicions that the Federal Reserve ( Fed ) is less aggressive about its next rate hikes.
Futures contracts result in a gain of 0.77% for the Paris CAC 40, 0.52% for the Dax in Frankfurt, 0.32% for the FTSE in London and 0.66% for the EuroStoxx 50.
Apple and Amazon rose 3% and 3% in after-hours trading, respectively, in response to strong quarterly results and better-than-expected forecasts.
These announcements should primarily benefit the Nasdaq, which is reported by the “Futures” Americans to be up 1.35% for the time being, while the Standard & Poor’s 500 could gain 0.66% and the Dow Jones could open evenly.
In Europe, the morning will once again be livened up by corporate publications including BNP Paribas, Renault, Hermès and AstraZeneca.
The session will also be rich in indicators, mainly the first figures for July’s inflation and second quarter growth in the Eurozone at 09:00 GMT.
In France, economic growth recovered more sharply than expected at 0.5% in the April-June period, according to the first results published by INSEE.
In the United States, gross domestic product shrank 0.9% from April to June after falling 1.6% in the previous quarter, prompting economists to question whether the world’s largest economy is already in recession or nearing it stands in front of it.
For some observers, this renewed contraction in GDP is rather good news as it could prompt the Fed to tighten less restrictively.
ON WALL STREET
The New York Stock Exchange ended Thursday for the second straight day after releasing second-quarter GDP, with the Dow Jones index up 1.03% to 32,529.63 points and the S&P 500 up 1.21% 4,072.43 points and the Nasdaq Composite was up 1.08% to 12,162.59 points.
With earnings season in full swing, growth forecasts have been upgraded as more S&P 500 companies report better-than-expected quarterly results.
Among them automaker Ford, which jumped a better-than-expected 6.1% after releasing quarterly earnings.
Meta Platforms slipped 5.2% after reporting its first quarterly revenue decline on Wednesday.
In China, the Shanghai SSE Composite fell 0.76% and the CSI 300 fell 1.12% after Beijing failed to mention its growth target for 2022 after a Communist Party meeting, instead focusing on making the best possible ones to achieve results for the economy.
“The Politburo meeting reinforces our view that stimulus will remain relatively dovish this year and that the economy will continue to operate well below potential in the coming quarters,” said Julian Evans-Pritchard, economist at Capital Economics.
After hitting a seven-week high on Thursday, the Nikkei ended balanced (-0.05%) on the Tokyo Stock Exchange.
On the earnings side, automaker Nissan fell 4.85% after posting a 14% drop in quarterly operating profit on chip shortages, anti-COVID restrictions in China and high commodity prices.
In the bond market, the 10-year Treasury bill yield fell slightly to 2.6577% after falling to its lowest level in more than a month at 2.649% in Thursday’s session, in response to the unexpected fall in US GDP in the second trimester.
Its German equivalent, for its part, advances to 0.815% in the first exchanges.
The dollar fell 0.5% against a basket of other benchmark currencies and the European single currency rose to $1.0227.
Oil prices are moving in a mixed order between supply concerns and possible recession concerns.
Brent fell 0.22% to $106.9 a barrel and US light oil (West Texas Intermediate, WTI) fell 0.34% to $96.75.
(Written by Laetitia Volga, Editing by Kate Entringer)