European stock markets are expected to open slightly lower

(APMF IN-DOW JONES) European stock markets are headed for a slightly lower open on Friday, as several senior Federal Reserve officials tempered hopes for a smooth interest rate cut.

IG expects an opening loss of 47 points for the German DAX and minus 28 points for the French CAC 40. The UK’s FTSE looks set to open 14 points lower.

Stock markets in Europe ended lower on Thursday. After Wednesday’s big day, which focused on US inflation numbers, investors slowed down.

Following the US inflation report, markets appear to be pricing expected Fed interest rates at the right level, Pepperstone analysts said.

However, Thursday’s overall numbers from the US give a mixed picture, according to KBC.

According to Commerzbank, bond markets entered calmer territory following the release of US macro figures on Wednesday. Data from the euro zone and speeches from European Central Bank executives could provide support for the German Bund, according to the German bank.

The German ten-year interest rate reached 2.44 percent on Thursday.

On a macroeconomic level, the situation was calm in the Eurozone on Thursday. News came from Japan that the economy there contracted by 0.5 percent in the first quarter. A contraction of 0.4 percent was expected.

“The disappointing growth numbers reduce the chance of another rate hike by the Bank of Japan,” said Simon Wiersma, investment director at ING.

Company news

Insurance companies did good business in Frankfurt, with profits of around 2 percent for Hannover Re and Munich Re. Sector rival Aegon presented quarterly figures in Amsterdam and announced a new €200 million share buyback programme. The stock rose 0.9 percent.

Merck KGaA shares rose 1.7 percent on the German DAX index, while Sartorius shares lost 5.2 percent. Even Siemens lost 6.8 percent after opening the books. The numbers were disappointing. Analysts from RNC Capital Markets also noted that a sale of Innomotics would further simplify the company. Siemens sells Innomotics to KPS Capital Partners for €3.5 billion.

In Paris, ArcelorMittal shares led the way, with an increase of 2.9 percent, if corrected for previous dividends. Moreover, gains were very modest in the CAC 40. Shares of TotalEnergies and Safran fell by 1.5 to 2 percent.

Telecoms and technology company BT Group increased its dividend in its annual results on Thursday, according to Citi Research, a sign of confidence in its plan to increase revenue per user. The price rose 17.2 percent in London.

KBC’s earnings saw a much less steep decline in the first quarter than expected, thanks to better-than-expected revenue. KBC also announced that it will pay an extraordinary interim dividend of €0.70 per share. The share is still falling by 2.7 percent in Brussels.

Following the numbers, Syensqo stock fell 0.6% in Bel20. However, investment bank Jefferies reported better-than-expected results in the first quarter. Umicore also saw a strong decline in the Belgian Star Index on Thursday with the share price losing 4.5 percent following the sudden resignation of its CEO.

Euro Stoxx 50 5,072.45 (-0.6%)
STOXX Europe 600 523.62 (-0.2%)
DAX 18,738.81 (-0.7%)
CAC 40 8,188.49 (-0.6%)
FTSE 100 8,438.65 (-0.1%)
SMI 11,946.66 (+0.4%)
IEX 913.56 (+0.02%)
Bill 20 3,995.10 (-0.9%)
FTSE MIB 35,410.13 (+0.1%)
IBEX 35 11,299.30 (-0.6%)

US stocks

Wall Street is preparing for a broadly flat open on Friday.

US stock markets stayed close to home on Thursday and closed just below the records set the day before. The Dow briefly rose above 40,000 during the session, but was unable to stay above it.

Investors took a breather after a number of important macro data appeared in the US the previous day. US retail sales fell unexpectedly and the inflation numbers did not contain any bad surprises.

“Yesterday’s inflation and retail data in the US confirmed the view that current monetary policy is sufficiently restrictive. Markets viewed both data as further evidence that interest rates will be cut, and given the Fed Fund outlook for September, a rate cut is a big deal.” Importance “It was almost a given by then,” said Frank Franken of the Edmond de Rothschild bank.

“If I [woensdag] I was surprised by something, it was the number for the retail control group. This number does not include cars, gas stations, food, and building materials. This number was much weaker than expected. “If this trend continues, we may also see the Fed shift to a more dovish stance sooner than expected,” said Edmond de Rothschild, a bank expert.

However, John Williams of the Federal Reserve Bank of New York warned on Thursday that it was still too early to cut interest rates. His colleague at the Federal Reserve Bank of Cleveland, Loretta Mester, hinted that high interest rates will continue for a while.

Markets are currently anticipating 51 basis point cuts in federal funds rates this year, with the September cut almost fully accounted for, leaving little room for Treasuries to rise, Jefferies said.

“We support two interest rate cuts by the Fed, starting in September, and do not see much room for one.” [obligatie]”It has risen from current levels.” The yield on US ten-year bonds reached 4.386 percent on Thursday evening, while the yield on two-year bonds reached 4.806 percent.

Not everyone is convinced by the current positive sentiment in the market. JPMorgan CEO Jamie Dimon said on Thursday that “happy talk” is pushing stocks higher, but he stuck to his view that the chance of a soft landing for the U.S. economy is about half what markets expect.

On a macroeconomic level, it was announced on Thursday that the number of new applications for unemployment benefits in the United States decreased last week. The number of new applications reached 222 thousand, a decrease of 10 thousand. 221,000 new applications were expected.

US industrial production remained stable in April, with a slight increase of 0.1 percent expected.

The Philadelphia area industrial activity index fell more than expected in May. The so-called Philadelphia Fed index fell from 15.5 in April to 4.5 in May. Economists had previously expected a drop to 8.0.

US import prices rose 0.9 percent month-on-month in April, compared to an expected increase of 0.3 percent. Export prices rose by 0.5 percent on a monthly basis.

The number of homes under construction in the US rose 5.7% in April, while the number of building permits issued came under pressure and fell 3.0% month over month.

Oil prices rose further on Thursday. At a settlement of $79.23, a barrel of WTI became 0.8 percent more expensive.

“Financial markets are now betting on an interest rate cut by the Fed in September, which would continue to weaken the dollar’s ​​strength,” according to analysts at StoneX. This is good for oil prices.

Company news

Walmart saw its profits rise sharply last quarter, while its sales also rose, and the retail giant decided to slightly increase its full-year earnings forecast. The stock rose 7.0 percent.

Deere & Co. lowered its earnings forecast for this fiscal year again on Thursday, after lower sales and results last quarter. The stock fell 4.7 percent.

Cisco Systems reported better-than-expected revenue in the third quarter of its current fiscal year after hours on Wednesday, with the acquisition of Splunk boosting results. Trading expectations turned out to be higher than expected. Cisco shares still fell 2.7 percent.

Baidu reported lower profits in the first quarter due to slight growth in sales. The Chinese internet and artificial intelligence company announced this on Thursday. Baidu’s listing in the United States rose 1.6 percent.

JD.com saw profits rise in the first quarter. The Wall Street-listed Chinese technology company made the announcement on Thursday afternoon. The stock rose 2 percent.

The European Commission officially launched an investigation on Thursday into possible violations of legislation protecting minors by Meta, the company that owns Facebook and Instagram, among others. Meta shares fell 1.7 percent.

Shares of meme company GameStop and AMC Entertainment lost 30 and 15 percent, respectively, after Wednesday’s decline and big gains in the previous days. On a weekly basis, stocks are still trading significantly higher.

Under Armor shares fell one percent despite the apparel retailer announcing a restructuring plan to boost growth.

Applied Materials reported quarterly after-hours numbers that beat expectations. In the period leading up to the results, the share fell by more than one percent. In after-hours trading, this was followed by a loss of about 2%.

S&P 500 5,297.10 (-0.2%)
Dow Jones 39,869.38 (-0.1%)
Nasdaq Composite 16,698.32 (-0.3%)

Asia

Asian stock markets were divided on Friday, but without major results.

In China, retail sales rose in April, but at a slower pace than in March. In fact, industrial production rose faster than in March.

Nikkei 225 38,789.10 (-0.3%)
Shanghai Composite 3,119.27 (-0.1%)
Hang Seng 19,433.14 (+0.3%)

Currencies

EUR/USD was trading at 1.0856 this morning. On Thursday evening, the currency pair was trading at 1.0870.

USD/JPY 155.81 yen
EUR/USD EUR 1.0856
EUR/JPY 169.12

Overall agenda:
04:00 Retail Sales – April (Chi)
04:00 Industrial Production – April (Chi)
11:00 Inflation – April Final (EUR)
4:00 PM Key Indicators – April (US)

Company News:
07:00 ENGIE – Q1 numbers (France)

Source: ABM Financial News

ABM Financial News is a resource for stock market news, video and data, both for real-time trading platforms and trading rooms and for online and offline media publications. The information in this article is not intended to provide professional investment advice or a recommendation to make particular investments.