by Laetitia Volga
PARIS (Reuters) – Major European stocks are expected to open with little change at the open on Thursday as inflation and central bank fears continue to dampen global equities while boosting bond yields.
Futures contracts on indices give a drop of 0.26% for the Parisian CAC 40, 0.14% for the Dax in Frankfurt but an increase of 0.13% for the FTSE in London.
Released earlier in the week, inflation figures for several major European countries came in above expectations. Analysts therefore have little hope that price pressures will ease across the euro zone. Eurostat is due to publish its first estimate of consumer price developments in February at 10:00 GMT.
There is “very little or no sign of a disinflationary process outside of energy and commodity prices” despite the European Central Bank’s rate hikes, ING’s Carsten Brzeski said in a note.
In the United States, manufacturing activity contracted again last month, but it is above all the rise in an index on commodity prices that is worrying, the latest sign to date of stubborn inflation.
Investors still expect the Fed to hike rates a quarter point in three weeks, but the likelihood of a half point hike has gained ground recently. More and more traders are anticipating that the Fed will raise its key rate beyond 5.5%, according to the CME’s FedWatch tool.
AT WALL STREET
The New York Stock Exchange ended in mixed order on Wednesday as bond yields rose after the release of manufacturing activity data pointing to still-high inflation, on the sidelines of further cautious comments from Fed officials.
The Dow Jones Index gained 0.02%, or 5.14 points, to 32,661.84 points, the S&P-500 lost 18.76 points, or 0.47%, to 3,951.39 points and the Nasdaq Composite fell 76.06 points (0.66%) to 11,379.48 points.
Fueling fears over a still-aggressive monetary policy from the US central bank, Minneapolis Fed Chairman Neel Kashkari said he was open to the idea of a 25 basis point or 50 basis point rate hike. in March.
On the value side, the Novavax laboratory plunged by nearly 26% after having expressed doubts about its ability to continue its activities and having announced a plan to reduce its expenses.
Tesla lost up to 5% in after-hours trading as the automaker failed to discuss the much-anticipated launch of an affordable electric vehicle at an investor day.
According to index futures, the Nasdaq could lose 0.79% at the open, the S&P-500 0.59% but the Dow would gain 0.07%.
IN ASIA
The Tokyo Stock Exchange ended stable (-0.06%), hampered by the expected decline in the Nasdaq on Thursday and uncertainties about Fed policy.
Variations were also limited in China ahead of Sunday’s opening of the annual session of the National People’s Congress when annual economic targets will be set and top officials elected.
Mainland China’s large-cap CSI 300 index fell 0.2% and Shanghai’s SSE Composite 0.1%.
RATES/EXCHANGES
In the bond market, US benchmark yields continue to rise. The two-year one, 4.931%, is at its highest level since 2007 and the ten-year one is at 4.0438%, a peak of around four months.
In the eurozone, the ten-year German Bund yield gained five basis points to 2.764%, setting a new high since 2011.
With the rise in US bond yields, the “dollar index”, which measures the variations of the greenback against a basket of currencies, gained 0.18%.
The euro retreats around 1.0638 dollars.
OIL
Oil prices are little changed after two sessions of gains thanks to a strong economic recovery in China, the first importing country.
Brent is stable at $84.21 a barrel and US light crude (West Texas Intermediate, WTI) at $77.56.
(Laetitia Volga, editing by Tangi Salaün and Kate Entringer)
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