The Euronext stock exchange in the business district of La Défense
by Claude Chendjou
PARIS (Reuters) – The main European stock markets are expected to fall slightly at the opening on Wednesday, the momentum generated by the slowdown in inflation in the United States running out of steam a few hours before the decisions of the Federal Reserve (Fed). that uncertainty remains on the path of rates beyond this week.
Index futures suggest a decline of 0.19% for the CAC 40 in Paris, 0.10% for the Dax in Frankfurt, 0.18% for the FTSE 100 in London and 0.16% for the EuroStoxx 50.
Main meeting of the week, the Fed must publish at 18:00 GMT a press release after two days of meeting of the FOMC, its monetary policy committee. This will be followed half an hour later by a press conference by its president, Jerome Powell.
According to the CME Group’s Fedwatch barometer, traders are counting with a 91.9% probability that the “fed funds” target will be maintained at 5.00%-5.25% on Wednesday. However, this break could be short-lived since the probability of a further rise in the cost of credit in July is more than 60%, with core inflation (core CPI) in the United States in May still remaining high (+5 .3% over one year) despite the slowdown to 4.0% over one year in consumer prices (CPI).
“While low headline inflation gives the Fed the green light to suspend its rate hike cycle on Wednesday, persistent core inflation will keep the Fed on the hike button. rates in the coming months,” predicts Tony Sycamore, a market analyst at IG.
The publication at 12:30 GMT of monthly producer prices (PPI) in the United States could confirm or invalidate these fears.
In the euro zone, the market will take notice on Friday of the final inflation figures for May, while its slowdown was confirmed on Tuesday in Germany and Spain before the monetary policy decisions of the European Central Bank (ECB) scheduled for Thursday.
VALUES TO FOLLOW IN EUROPE:
AT WALL STREET
The New York Stock Exchange ended higher on Tuesday, buoyed by modest gains in May inflation data, which pushed the S&P 500 and Nasdaq to 14-month highs.
The Dow Jones Industrial Average gained 0.43%, or 145.79 points, to 34,212.12 points. The broader Standard & Poor’s 500 gained 30.08 points, or 0.69% to 4,369.01 points. The Nasdaq Composite advanced for its part by 111.40 points (0.83%) to 13,573.32.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index advanced 1.88% to 33,639.03 points and the Topix, larger, took 1.35% to 2,295.41 points as the closing approached.
The MSCI index comprising stocks from Asia and the Pacific (excluding Japan) rose by 0.2%.
In China, the Shanghai SSE Composite gained 0.15% and the CSI 300 gained 0.3%.
EXCHANGES/RATES
The dollar is stable on Wednesday (+0.02%) against a basket of benchmark currencies after falling the day before to 103.04 points, its lowest since May 22 in reaction to consumer price figures in the States which reinforced the scenario of a status quo on Fed rates this month.
The greenback is at a three-week low against the euro which is trading at $1.0783 and at a one-month low against the pound sterling which is trading at $1.2607.
The yield on ten-year US Treasury bills fell about three basis points to 3.8095%.
OIL
The oil market is still progressing after having already gained more than 3% on Tuesday in the prospect of a pause on rates in the United States: Brent advances by 0.44% to 74.62 dollars a barrel and American light crude ( West Texas Intermediate, WTI) 0.35% to $69.66.
(Written by Claude Chendjou, edited by Bertrand Boucey)