Wall Street expected down, SMIs weigh on the euro

      Comments Off on Wall Street expected down, SMIs weigh on the euro

by Laetitia Volga

PARIS (Reuters) – Wall Street is expected down but European stock markets are in the green mid-session Friday, supported by the depreciation of the euro after the results of inquiries from purchasing managers worrying about growth in the euro zone.

The rise in equities, however, is limited by lower oil and commodity prices.

US index futures signal a Wall Street opening down about 0.5%. Closed for Thanksgiving, the New York Stock Exchange will reopen only for a half-session with a close at 18:00 GMT.

In Paris, the CAC 40 rose 0.1% to 4.942.86 at 12.45 GMT. In Frankfurt, the Dax takes 0.19% and in London, the FTSE fell by 0.09%, penalized by the decline in energy values.

The pan-European FTSEurofirst 300 index gained 0.08%, the EuroStoxx 50 in the euro zone 0.16% and the Stoxx 600 0.16%.

EXCHANGE

On the foreign exchange market, the euro drops 0.45% to 1.1356 dollars, the lowest in a week. The decline of the single currency is linked to figures below the expectations of flash PMI indices in Germany and the euro zone, which reflect a slowdown in business growth.

"The German PMI is particularly disappointing (…) The context is complicated for the euro," said Thu Lan Nguyen, strategy manager at Commerzbank in Frankfurt, which also discusses the uncertainty on the Italian budget.

"The economy of the euro area has cooled considerably in recent months and, unless it is only a brief interlude, the European Central Bank could be forced to stick to an accommodative monetary policy" , she adds.

Added to the PMI is the confirmation of the contraction of German GDP in the third quarter, mainly due to a slowdown in exports.

The dollar earns, at the same time, 0.09% against a basket of reference currencies.

The pound loses around 0.4% against the dollar in the wake of the rebound caused by the announcement of an agreement on a joint declaration to the EU and Britain in view of Brexit. But nervousness picked up before the extraordinary summit of EU heads of state and government scheduled for Sunday to validate the draft reached last week.

VALUES IN EUROPE

The core resources sector (-1.79%) and the oil and gas sector (-1.62%) are the only sectoral declines in Europe with the decline in industrial metals and oil prices.

Royal Dutch Shell drops 2.31% and BP 1.2%. In Paris, Total and TechnipFMC sell respectively 1.57% and 2.52%.

On the upside, Renault takes advantage of the increase in the recommendation of Jefferies, to "buy" against "keep" and takes 3.65%, the largest increase in ACC, reducing its weekly loss to 4.8%.

Eramet jumped 14.65% on a recommendation increase by Bank of America Merrill Lynch that expects the mining and metallurgical group to benefit from a rebound in demand for manganese in China.

The trend is also supported by banks, whose Stoxx index is 0.76%, led by Banco BPM, which gained 2.73% against a backdrop of hopes for progress in discussions on the Italian budget.

VALUES TO BE FOLLOWED AT WALL STREET

The retail sector will be in the front line on this day of "Black Friday" which launches the Christmas shopping period in the United States. Investors will remain on the lookout for any indication of distributors on their margins. According to a Reuters / Ipsos poll released last week, 38% of Americans plan to shop at Black Friday.

Oil stocks and especially the Chevron and Exxon Mobil groups could suffer from the significant drop in the price of a barrel of crude oil.

RATE

Like the euro, European bond yields are retreating after disappointing indicators. The ten-year Bund rate loses about two basis points to 0.35%. Italian yields are coming back after press reports, which have since been belied, that Italian Minister of European Affairs Paolo Savona wanted to resign in protest of the government's budget strategy.

The ten-year Italian falls to 3.384% and the two-year loses more than 10 basis points to 0.941%, a two-month low.

In the US Treasury market, the 10-year yield is down slightly and is close to 3.05%.

OIL

The price per barrel has fallen sharply and hit lows since October 2017, again due to worries about a glut of supply in the wake of the announcement of an increase in crude inventories in the United States.

US light crude fell 4.61% to fall to 52.11 dollars and Brent leaves more than 2.6%, under 61 dollars.

METALS

Nickel prices fell to an 11-month low due to fears of oversupply next year and falling demand in China, the largest consumer of the metal.

Other industrial metals are also falling, investors fearing a failure of talks planned between Donald Trump and Xi Jinping next week on trade.

(With Ritvik Carvalho in London, edited by)