by Claude Chendjou
PARIS (Reuters) – The main European stock markets are expected on a cautious note at the opening on Wednesday before the publication of inflation figures in the United States and the first results of companies for the period January-March.
According to the first indications available, the Parisian CAC 40, which registered a historic record at 7,403.67 points on Tuesday, should lose 0.02% on Wednesday at the opening. The Dax in Frankfurt could nibble 0.06% and the FTSE 100 in London 0.01%. The EuroStoxx 50 index is expected to fall by 0.09%.
After the monthly report on employment in the United States, published on Friday, investors expect this Wednesday, at 12:30 GMT, the US consumer price statistics (CPI) for the month of March. The Reuters consensus forecasts a deceleration in the CPI to 0.2% over one month and 5.2% over one year. The “core” CPI index, the most followed by the American Federal Reserve (Fed), is expected to slow down by 0.4% after 0.5% the previous month, but over one year it could have accelerated to 5.6 % against 5.5% previously.
In addition to this statistic, the market will take notice on Thursday of producer prices (PPI) in the United States and final consumer price figures in Germany for the month of March.
Investors also have their eyes on corporate results for the first quarter, which start this week, with LVMH in the luxury sector on Wednesday, followed by Hermès and the major American banks on Friday.
Analysts expect S&P-500 companies to report quarterly earnings down 5.2% year-on-year, down from 1.4% growth previously expected at the start of the year, according to Refinitiv data.
“Investors are waiting for important events – CPI, PPI and the banks that will publish their results”, summarizes Randy Frederick, director of trading and derivatives at Charles Schwab.
“If the Fed gets to a point where it just keeps rates steady, markets can potentially do well. What worries me is that if the Fed continues to tighten (monetary conditions), it will continue create tensions for some banks,” he added.
The minutes of the March 21 and 22 meeting of the Fed, scheduled for 6:00 p.m. GMT, will perhaps provide some information on the path of rates and the impact of the banking stress observed last month.
AT WALL STREET
The New York Stock Exchange ended in mixed order on Tuesday, with only the Dow Jones ending in the green amid a wait-and-see attitude linked to US inflation data and the start of the earnings season.
The Dow Jones Industrial Average gained 0.29%, or 98.27 points, to 33,684.79 points.
The broader S&P-500 lost 0.17 points, marginally lower, to 4,108.94 points.
The Nasdaq Composite fell for its part by 52.48 points (0.43%) to 12,031.88 points.
Sensitive to changes in the economy, sectors such as industry and transport carried the Dow Jones, while the Nasdaq and the S&P-500, once on the rise, fell into the red at the end of the session.
Wall Street briefly racked up gains in the afternoon after Chicago Fed Chairman Austan Goolsbee urged caution and warned that the US central bank should be careful not to be too aggressive in its hikes interest rates to curb inflation.
Note, on the value side, the jumps between 6% and 17% of players in the cryptocurrency sector such as Coinbase Global, Riot Platforms and Marathon Digital against a backdrop of the rise in bitcoin.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index rose 0.68% to 28,112.48 points and the broader Topix gained 0.76% to 2,006.92 points at the close. The indices thus recorded a fourth consecutive session in the green, supported by signs of an increase in consumption in department stores and the prospect of an increase in investments by American billionaire Warren Buffett in the archipelago.
In China, the Shanghai SSE Composite gained 0.29%, while the CSI 300 fell 0.15%.
The MSCI index comprising stocks from Asia and the Pacific (excluding Japan), for its part, fell by 0.17%.
VALUES TO FOLLOW IN EUROPE:
CHANGES
The dollar varied little on Wednesday (-0.06%) against a basket of benchmark currencies pending US inflation.
The euro rose 0.14% to $1.0925 after hitting a one-week low on Monday.
Bitcoin, which peaked at a ten-month high of $30,438 on Tuesday amid rising risk appetite, is trading at $29,969.48 (-0.74%) on Wednesday.
RATE
Ten-year and two-year US Treasury bond yields were broadly stable at 3.4299% and 4.0414%, respectively.
Ten-year and two-year German Bund yields were also virtually unchanged, at 2.69% and 2.30% respectively.
OIL
Oil prices are virtually unchanged ahead of US inflation data which could weigh on interest rates, the dollar and ultimately demand.
Brent climbed 0.21% to 85.79 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.18% to 81.68 dollars.
(Written by Claude Chendjou, edited by Matthieu Protard and Kate Entringer)
©2023 Thomson Reuters, all rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. “Reuters” and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.