European shares slipped on Friday as traders paused after the S&P returned to a bull market, while weak earnings from the chemicals sector weighed on sentiment.
European blue-chip indexes extended early losses, with the region’s Stoxx 600 and Germany’s Dax both down 0.3%.
London’s FTSE 100 fell 0.4 percent after Croda issued a profit warning. Shares of the chemicals company fell more than 13%, hitting their lowest since early 2020, after warning customers it was drawing down inventories. The Stoxx 600 chemicals index fell 2%.
U.S. futures were mixed after Wall Street’s benchmark S&P 500 rose 0.6% overnight. The close pushed the blue-chip index into bull market territory, defined as a gain of 20 percent or more from its recent low in October. The tech-heavy Nasdaq Composite rose 1%.
Contracts tracking Wall Street’s benchmark S&P 500 index fell 0.1%, while those tracking the tech-heavy Nasdaq 100 rose 0.1% ahead of the New York open.
Meanwhile, investors prepared for a meeting of European Central Bank policymakers next week, betting they would raise the bank deposit rate by 0.25 percentage points, above the current level of 3.25%.
“While recent inflation numbers have moderated, (ECB President Christine Lagarde) will show that their job on inflation is far from done,” said Mohit Kumar, chief European economist at Jefferies.
Across the Atlantic, most investors do not expect the Federal Reserve to raise interest rates this month, especially after data on Thursday showed a cooling labor market.
“Markets are being rocked by weekly U.S. jobs data that show a rise in unemployment, giving the Fed even more reason to consider a pause in rate hikes when it meets next week,” said Matt Britzman, equity analyst at Hargreaves Lansdown. “And those big benefactors? Of course.” It’s big tech,” he added.
The Vix volatility index closed at its lowest level since the panic triggered by the coronavirus pandemic three years ago, suggesting calm across the market. The benchmark measures the S&P’s expected volatility for the month ahead.
However, the two-year U.S. Treasury yield, which is sensitive to interest rate expectations, rose 0.03 percentage point to 4.55%. The 10-year Treasury yield rose 0.03 percentage point to 3.75%. Bond yields rise as prices fall.
In Turkey, the lira edged higher after Turkish President Recep Tayyip Erdogan appointed former U.S. banker Hafize Gaye Erkan to lead the country’s central bank. The dollar fell to an all-time low of 1.4% to 23.54.
The move comes days after Erdogan named former deputy prime minister and investor favorite Mehmet Simsek as finance minister, a further sign that the Turkish president may be changing the direction of his unorthodox policies.
Asian shares rose, with Hong Kong’s Hang Seng up 0.5%, while China’s CSI 300 rose 0.4%.
China’s consumer price inflation remained near zero in May, data showed on Friday, adding to signs of weakening demand in the world’s second-largest economy amid a prolonged shutdown.