Pause in sight for European stocks, uncertainties on the Fed


THE MAIN EUROPEAN EXCHANGES EXPECTED WITHOUT MAJOR CHANGE

by Laetitia Volga

PARIS (Reuters) – The main European stock markets are expected to be unchanged at the opening on Friday, as investors remain uncertain about the degree of aggressiveness with which the Federal Reserve will raise interest rates in the United States despite the slowdown in inflation last month.

The first indications available indicate a drop of 0.04% for the Paris CAC 40, 0.07% for the Dax in Frankfurt, 0.02% for the FTSE in London and 0.05% for the EuroStoxx 50 .

Thursday’s release of an unexpected month-on-month decline in the U.S. producer price index confirmed the lull on the U.S. inflation front after the price figures fell short of expectations to consumption.

While this initially delighted investors by encouraging hopes of less restrictive monetary tightening than expected from the Fed, several officials of the institution warned against excessive optimism.

San Francisco Fed President Mary Daly said Thursday that while a September half-point rate hike “makes sense,” she is open to the possibility of a bigger hike in the face of inflation. still more than four times higher than the 2% target.

“The market will realize that the Fed’s Monetary Policy Committee still has a lot of work to do and that it will have to raise the fed funds rate target to 4% by the end of the year” , said Carol Kong at Commonwealth Bank of Australia. “I think there is some leeway for the markets to revise upwards their expectations for the ‘fed funds’ rate.”

AT WALL STREET

The New York Stock Exchange ended in mixed order on Thursday, with the Nasdaq and the S&P 500 closing slightly lower on lingering uncertainties about the pace of Fed monetary tightening.

The Dow Jones index gained 0.08% to 33,336.67 points, the Nasdaq Composite fell 0.58% to 12,779.91 points and the S&P-500 lost 0.07% to 4,207.33 points.

The latter hit a three-month peak in session on the back of producer price data but Fed officials left little doubt that they intended to tighten monetary policy until inflationary pressures subsided. completely subside.

In values, Disney gained 4.68% after announcing that the number of its subscribers to its video streaming platforms had exceeded that of Netflix.

Futures contracts signal a session up slightly from 0.1% to 0.3%.

IN ASIA

At the Tokyo Stock Exchange, closed Thursday for a holiday, the Nikkei jumped 2.36% to its highest since mid-January, reacting in turn to the slowdown in inflation in the United States.

The leading contributor to the index’s rise, SoftBank gained 5.81% after announcing that it would make a gain of $34.1 billion by reducing its stake in Alibaba.

Honda Motor rose 3.47% as the automaker raised its outlook for full-year operating profit thanks to the weak yen.

In China, Shanghai’s SSE Composite Index and mainland China’s large-cap CSI 300 lost 0.14% amid an outbreak of COVID-19.

Health authorities have listed more than 2,000 new contaminations by the SARS-CoV-2 coronavirus on Wednesday and Thursday against around a thousand in the previous days.

EXCHANGES/RATES

The dollar is slightly up against a basket of international currencies (+0.1%) and the euro is stable at 1.032.

On the bond market, the yield on ten-year Treasuries fell slightly to 2.8657% the day after a three-week peak at 2.902%, investors relativizing the impact of the latest US inflation figures on the determination of the Fed to continue its monetary tightening.

OIL

Oil prices are down amid uncertainty over the demand outlook following diverging forecasts from OPEC and the International Energy Agency.

Brent fell 0.54% to 99.06 dollars a barrel and US light crude (West Texas Intermediate, WTI) fell 0.6% to 93.77 dollars.

(Written by Laetitia Volga, edited by Matthieu Protard)

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