PARIS (Reuters) – Europe’s major stock markets are heading for another decline on Wednesday as market sentiment remains weighed down by signs of an economic slowdown and the prospect of further interest rate hikes amid still-soaring inflation .
Futures contracts on indices suggest a drop of 0.18% for the CAC 40 in Paris, 0.39% for the Dax and 0.22% for the EuroStoxx 50. London could narrowly escape the general decline since the FTSE 100 is currently indicated up 0.05%.
The CAC 40, like the Dax and the broad European Stoxx 600 index, has already posted three consecutive sessions of decline and is now posting a negative performance for the month of August after the marked rebound in July.
Tuesday’s session was dominated by economic indicators that underscored the reality of the risks of recession, whether it be the European and American “flash” PMI indices, the majority of which reflect a contraction in private sector activity, or sales of new homes in the United States, at their lowest for six and a half years in July.
However, investors continue to anticipate further monetary tightening, an option that several officials of the US Federal Reserve have favored in recent days as a prelude to the speech to be delivered on Friday by the president of the institution, Jerome Powell, at the symposium. of Jackson Hole, Wyoming.
Neel Kashkari, the president of the Minneapolis regional office, explained on Tuesday that his biggest fear was that the monetary authorities underestimated the extent and duration of inflationary pressures, adding that it was “very clear” to his eyes that the Fed should continue to tighten policy.
In fact, rare are the analysts to bet on a softening of the speech of Jerome Powell in spite of the deterioration of the economic indicators.
“If you start to give the market some hope that things will improve over time, you risk ending up undermining your own strategy,” said ING economist Rob Carnell.
AT WALL STREET
The New York Stock Exchange ended lower on Tuesday after the first results of the S&P Global PMI survey and new home sales statistics.
The Dow Jones index fell 0.47%, or 154.02 points, to 32,909.59 and the Standard & Poor’s 500 lost 9.26 points, or -0.22%, to 4,128.73 while the Nasdaq Composite ended almost unchanged at 12,381.30.
Zoom Video Communications fell 16.5% after lowering its full-year profit and revenue guidance amid falling demand and intensifying competition as Macy’s gained 3.76% after quarterly results above market expectations and that Palo Alto Networks took 12.1% after solid results and the announcement of a division by three of the nominal value of its share.
Index futures so far suggest an open down around 0.3%.
IN ASIA
At the Tokyo Stock Exchange, the Nikkei index, ended down 0.49%, its fifth consecutive decline, and recorded its worst closing since August 10.
In China, the Shanghai SSE Composite fell 1.4% and the CSI 300 1.37%, the lowest in two weeks, as fears of an economic slowdown regained the upper hand over hopes of new stimulus measures.
CHANGES
The dollar is up slightly against the other major currencies (+0.14%) and brings its rise since the start of the week to more than 0.5%.
The euro fell another 0.25% against the greenback at 0.9942 but remained above the new low of nearly 20 years recorded Tuesday in session at 0.99005.
RATE
Yields on US Treasuries fell about two basis points to 3.0369% for ten-year bonds and 3.307% for two-year bonds.
They thus retrocede a little of the rise recorded on Tuesday, which took the ten-year to its highest level in more than a month, investors betting on a “tough” speech from Jerome Powell in Jackson Hole despite signs of deterioration of the economic situation.
In Europe, the ten-year German Bund yield is up slightly in early trade at 1.337%. It hit 1.375% on Tuesday for the first time since July 1.
OIL
The price of a barrel is falling, the fear of a reduction in supply from OPEC + which had favored an increase of nearly 4% on Tuesday dissipating little by little.
Brent fell 0.18% to $100.04 a barrel and US light crude (West Texas Intermediate, WTI) 0.07% to $93.67.
(Written by Marc Angrand, with Tom Westbrook in Singapore, edited by Matthieu Protard)