Street Calls of the Week
Investing.com - European equity indices steadied Friday in cautious trading ahead of the monthly U.S. jobs report, as investors also digested the recent European Central Bank rate decision and global trade tensions.
At 03:05 ET (07:05 GMT), the DAX index in Germany dropped 0.1%, while the CAC 40 in France gained 0.1% and the FTSE 100 in the U.K. rose 0.2%.
U.S. payrolls dominates
Friday’s key event will be the release of the monthly nonfarm payrolls report in the U.S., a widely-watched gauge of the strength of the U.S. labor market, after a run of soft economic data this week.
Nonfarm payrolls are expected to have increased by 130,000 jobs last month after rising 177,000 in April, while the unemployment rate is seen holding steady at 4.2% for the third straight month.
A sharp drop could be enough to get the Federal Reserve’s policy-makers thinking again about interest rate reductions, after pausing their rate-cut cycle since December to assess the inflationary impact of Trump’s tariffs.
At the moment Fed funds futures imply little chance of a rate cut until September, although a move at that time is about 90% priced in with another expected in December.
ECB set to pause rate cuts?
Investors are also digesting the decision of the ECB to cut interest rates on Thursday, a move that was widely expected.
In a statement, the ECB said its decision to lower borrowing costs for the eighth time since last June comes as the euro area economy faces waning inflation but persistent uncertainty around the impact of global trade tensions.
However, the central bank also signalled it was nearing the end of its policy easing cycle, suggesting that another cut in July was unlikely.
The ECB should stop cutting interest rates at every meeting and instead keep its powder dry given an uncertain economic outlook, ECB policymaker Martins Kazaks said, in an interview with Reuters.
Data released earlier Friday showed that German industrial production declined 1.4% in April from the previous month, following a revised gain of 2.3% in March, initially reported as a 3.0% increase.
Trump/Xi Jinping hold talks
Germany’s new chancellor, Friedrich Merz, held talks with U.S. President Donald Trump on Thursday, in what was seen as a productive meeting, with the two men agreeing to strengthen cooperation on trade matters and other issues.
Adding to the positivity, Trump and Chinese President Xi Jinping held a phone conversation overnight, which produced little more than an agreement to talk further but may result in some of the heated dialogue being toned down.
Musk and Trump to hold peace talks
In the corporate sector, French software company Dassault Systemes (EPA:DAST) has delayed its medium-term earnings target by one year to 2029, at a time when weak auto demand and tariff-driven uncertainty weigh on its business.
Tesla (NASDAQ:TSLA) will also be in the spotlight after Politico reported White House aides have scheduled a call with CEO Elon Musk to broker peace after a public feud with U.S. President Donald Trump.
Tesla shares closed down over 14% on Thursday in New York, losing about $150 billion in market value.
Crude set for weekly gains
Oil prices slipped lower Friday on continued concerns over slowing growth and weakening demand, but were still on track for the first positive week in three amid growing expectations that global supplies will be tighter than initially expected this year.
At 03:05 ET, Brent futures slipped 0.5% to $65.02 a barrel, and U.S. West Texas Intermediate crude futures fell 0.5% to $63.02 a barrel.
On a weekly basis, both benchmarks were on track to settle higher after falling for two straight weeks. Brent has advanced 2% this week, while WTI is trading 4% higher.