EUROPEAN STOCK EXCHANGES EXPECTED ON THE RISE
by Laetitia Volga
PARIS (Reuters) – The main European stock markets are expected to rise on Friday after the results and forecasts exceeded expectations from Apple and Amazon while the contraction of the American economy for a second consecutive quarter continues to fuel the assumption that the Federal Reserve (Fed) is less aggressive for its next rate hikes.
Futures contracts give an increase of 0.77% for the Parisian 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 gained 3% and 12% respectively in out-of-hours trading in response to strong quarterly results and above-expected forecasts, both expecting demand to remain strong despite inflation.
These announcements should benefit the Nasdaq in the first place, indicated for the moment up 1.35% by the “futures” Americans, while the Standard & Poor’s-500 could take 0.66% and the Dow Jones open at balance.
In Europe, the morning is once again animated by corporate publications, including those of BNP Paribas, Renault, Hermès and AstraZeneca.
The session will also be rich in indicators with mainly the first figures for inflation in July and growth in the second quarter in the euro zone, at 09:00 GMT.
In France, economic growth rebounded more markedly than expected over the April-June period, at 0.5% according to the first results published by INSEE.
In the United States, gross domestic product contracted 0.9% in the April-June period, after falling 1.6% in the previous quarter, leading economists to wonder whether the world’s largest economy is already in recession or about to be.
For some observers, this new decline in GDP is rather good news because it could lead the Fed to be less restrictive in tightening its monetary policy.
AT WALL STREET
The New York Stock Exchange ended up Thursday for a second consecutive session after the announcement of second quarter GDP: the Dow Jones index gained 1.03% to 32,529.63 points, the S&P-500 took 1, 21% to 4,072.43 points and the Nasdaq Composite advanced 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 quarterly results that beat expectations.
Among them, the car manufacturer Ford whose title jumped 6.1% after the publication of a quarterly net profit better than expected.
Meta Platforms declined 5.2% after posting the first quarterly revenue decline on Wednesday.
In China, the Shanghai SSE Composite fell 0.76% and the CSI 300 1.12% after Beijing refrained from recalling mentioning its 2022 growth target after a Communist Party meeting, instead focusing on the obtaining the best possible results for the economy.
“The Politburo meeting reinforces our view that stimulus will remain relatively restrained this year and that the economy will continue to operate well below potential in coming quarters,” said Julian Evans-Pritchard, an economist at Capital Economics.
After reaching a seven-week peak on Thursday, the Nikkei ended at equilibrium (-0.05%) on the Tokyo Stock Exchange.
On the earnings side, automaker Nissan dropped 4.85% after posting a 14% drop in quarterly operating profit due to chip shortages, anti-COVID restrictions in China and high commodity prices.
In the bond market, the yield on ten-year Treasury bills fell slightly to 2.6577% after falling Thursday in session to the lowest in more than a month, at 2.649%, in reaction to the unexpected drop in US GDP in the second trimester.
Its German equivalent advances on its side to 0.815% in the first exchanges.
The dollar fell 0.5% against a basket of other reference currencies and the single European currency rose to 1.0227 dollars.
Oil prices are moving in mixed order between concerns about supply and those about a possible recession.
Brent lost 0.22% to 106.9 dollars a barrel and American light crude (West Texas Intermediate, WTI) took 0.34% to 96.75 dollars.
(Written by Laetitia Volga, Editing by Kate Entringer)