Still-strong labor market data in the United States on Friday backed up investors’ bets that the Federal Reserve will tighten its policy again, which has slowed stocks and boosted bonds.
Wall Street opened lower, losing further ground after the jobs report. The Nasdaq, which is more sensitive to rising interest rates, was down 1.04%, the S&P 500 was down 0.69% and the Dow Jones was down 0.41% at 14 GMT. Shortly before :00. European markets also weakened. Frankfurt rose just 0.42% and Milan 0.67%. Paris returned to the red (-0.28%), where London was at the start of the session (-0.36%).
The attack on former Prime Minister Shinzo Abe in Japan shocked Tokyo. After a good start to the session, it gained just 0.1% at the close. Shinzo Abe died from his injuries. The U.S. labor market surprised on Friday with more than expected job creation, according to data from the Labor Department. The unemployment rate has remained stable. The release has particularly sparked a reaction from the bond market. The interest rate on the previously stable American 2-year loan increased by nine basis points to 3.11%. The 2-year interest rate is the one that best reflects investors’ expectations for key U.S. central bank interest rates. The 10-year US Treasury yield also rose seven basis points to 3.06%. The Fed, eager to fight inflation, hinted earlier this week that it intended to keep raising interest rates as long as the labor market remains tight.
“That should allow the Fed to raise interest rates aggressively at its next meeting on July 27.,” maintains Mirabaud investment specialist John Plassardi. Investors expect the institution to raise its key interest rates by 0.75 percentage points, as at its last meeting. These expectations kept the dollar strong, very close to parity against the euro. The single European currency, at its lowest in 20 years, continued to slide and lost 0.21% to $1.0138 around 13:55 GMT after briefly dipping below $1.01. In Paris, luxury stocks were penalized by the weakness of the euro, whose fall against the dollar reduced the value of earnings earned by exporting companies abroad. Hermès lost 2.53%, L’Oréal lost 4.23%. Technology heavyweights have been hit by rising interest rates, which particularly punish high valuations; On Wall Street, Meta lost 0.75%, Microsoft lost 0.87% and Netflix lost 1.97%.
On the oil and bitcoin side
Oil prices rose slightly on Friday, continuing to recover slightly from earlier-week declines. At around 13:30 GMT, 1 barrel of North Sea Brent oil for September delivery rose by 1.28% to $105.99. The price of American West Texas Intermediate (WTI) oil futures for August increased by 1.30%, reaching 104.09 dollars. Gas prices in Europe remained tight due to the fallout from the Ukraine war, falling 2.58% to €178.50 per megawatt hour after a 25% jump in a few days. Bitcoin lost 1.63% to $21,260.
Source: Le Figaro
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