(Paris) The European stock market continued its rebound on Friday, unlike Wall Street, which abrogated its momentum after contrasting banking results and persistent inflation which is fueling the aggressive policy of the American central bank.
After a strong rise at the opening, the European indices reduced their enthusiasm at the end of the afternoon while managing to end up 0.90% in Paris, 0.67% in Frankfurt and 0.46% % to Madrid.
After the reversal of the British government on its economic program and the replacement of the Minister of Finance, the London Stock Exchange ended on a more timid rise (+0.12%).
On Thursday, European markets ended up sharply after dropping nearly 2% for some shortly after the US inflation report.
After an opening on the rise, Wall Street was downgraded: the Dow Jones dropped 0.71%, the NASDAQ index 2.13% and the broader S&P 500 index 1.57%.
The markets had made a turnaround on Thursday despite inflation which proved tenacious in September in the United States, despite the strong measures taken by the American Federal Reserve (Fed) to slow it down and return to around its target of 2% annually.
A sign that inflation is beginning to weigh on the purchasing power of Americans, retail sales stagnated in the United States in September.
Economist at RichesFlores, Thomas Bauer, however, sees “very little chance of constituting a sufficient signal for any change in monetary policy, even if the markets have, for a moment, bet on the contrary”.
“The Michigan survey does not provide much more clarification”, he believes, because while “household opinion on current conditions continues to rise”, the outlook “confirms the pessimism of households about the coming “.
We will therefore have to wait, according to him, for “other data, more convincing, to confirm a possible economic slowdown”.
In the euro zone, economic activity is likely to enter recession in 2023 against the backdrop of a lasting war in Ukraine, two senior officials of the European Central Bank (ECB) said on Friday.
Already threatened in her post after a month in power, British Prime Minister Liz Truss was forced to do a new about-face on Friday on her economic program by deciding to restore corporate tax and changed finance minister, in an attempt to reassure the markets.
The pound further accentuated its decline (-1.33% to 1.1175 dollars around 12:15 p.m. EDT) and the cost of British debt, which had been falling for several days, rose significantly (by 19 basis points, to 4.38 %).
“The markets are waiting to see what will happen in the next phase of the government’s budget, which is only a shadow of itself,” comments Michael Hewson, analyst at CMC Markets.
Four major US banks have released their quarterly results.
The results of JPMorgan Chase (+2.46%) were above expectations for both sales and net profit. Its rival Citigroup (+1.69%) published a turnover and a net profit down, but above expectations. Wells Fargo (+3.61%) did better than expected on its turnover while Morgan Stanley (-4.44%) suffered from the decline in the activity of investment bankers.
On the oil side
Oil prices fell further, with a barrel of Brent for December delivery down 2.80% at $91.90, while US WTI for November delivery was down 3.43% at $86.02 around 12:20 p.m. EDT.
Both are down more than 6% over the week, after their strong rebound in the wake of the decision to cut production quotas by OPEC countries and their allies last week.
Oil stocks Shell (-1.41%), BP (-0.70%), Repsol (-1.22%) and Exxon Mobil (-1.96%) fell in stride.