Market: Caution in sight in Europe ahead of central banks


by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected to be on a cautious note on Monday in the absence of a catalyst and at the start of a week marked by monetary policy meetings of several major central banks, including the American Federal Reserve ( Fed).

According to the first available indications, the Parisian CAC 40 should gain 0.11% at the opening and the Dax in Frankfurt 0.02%. The FTSE 100 in London is expected to fall by 0.12%. The EuroStoxx 50 index is expected to fall by 0.07%.

The Fed meets for two days on Tuesday and the market widely expects a new status quo on rates after a similar decision at the November meeting. Following the Fed’s decisions, the European Central Bank (ECB), the Bank of England (BoE) and the Swiss National Bank (SNB) will make theirs, and again no change in rates is expected for these three central banks.

Investors will be more on the lookout for clues on the medium and long term evolution of the price of money while the futures contracts indicate a reduction in rates from the ECB from March, from the Fed from May and from the BoE from September.

Pending Tuesday’s publication of consumer prices in the United States, the latest macroeconomic indicators on both sides of the Atlantic, particularly those linked to the labor market and the economy, have confirmed a certain effectiveness of the transmission of monetary tightening major central banks.

For today’s session, no major indicator is on the agenda, but the bond compartment, where yields in the euro zone and the United States hit several-month lows last week before rising slightly on Friday, should influence on trend.

A WALL STREET

The New York Stock Exchange ended higher on Friday as investors expressed optimism about a soft landing for the US economy following the release of the Labor Department’s monthly report.

The Dow Jones index gained 0.36%, or 130.49 points, to 36,247.87 points.

The broader S&P-500 gained 18.78 points, or 0.41%, to 4,604.37 points.

The Nasdaq Composite advanced 63.98 points (0.45%) to 14,403.97 points.

The Labor Department’s monthly report released Friday showed that the U.S. economy added more jobs than expected in November, 199,000, but the unemployment rate fell to 3.7%, while the average hourly wage rose. slowed to 4.0% year-on-year.

“The falling unemployment rate in particular is allaying fears of a recession, and with wages and earnings rising, the case for a soft landing remains relevant,” notes Stuart Cole, chief macroeconomist at Equiti Capital. .

In values, Nvidia and Meta Platforms, the parent company of Facebook, carried the Nasdaq.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index ended with a gain of 1.5% at 32,791.8 points after losing 3.4% last week, its lowest level in a month. The broader Topix gained 1.47% to 2,358.55 points.

The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) lost 0.65%.

In China, the Shanghai SSE Composite rose 0.74% and the CSI 300 advanced 0.59%.

In terms of Chinese economic statistics, consumer prices in the country fell by 0.5%, the most marked decline since the end of 2020, and production prices by 3%.

EXCHANGES/RATES

The dollar is practically unchanged (+0.07%) against a basket of reference currencies

The euro is also standing still (-0.01%), at $1.076, while the pound sterling is at $1.2541 (-0.04%).

The yen returned from a four-month high against the dollar, at 145.46 (-0.37%) against 141.60 last week.

On the bond market, the yield on ten-year US Treasury bonds is almost stable, at 4.2505%, after gaining up to 12 points on Friday in reaction to the publication of the US employment report. However, it still remains a good distance from the 16-year peak of 5.021% reached on October 23.

The yield on the ten-year German Bund varies little, at 2.262% after a gain of seven points on Friday.

OIL

The oil market is recovering a little after a decline of 3.9% over the past week which sent crude to a five-month low in a context of doubts about the ability of all OPEC+ members to stick quotas for reductions in extractions. The market is also awaiting the conclusions of Cop28.

Brent rose 0.79% to $76.44 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.73% to $71.75.

(Writing by Claude Chendjou, edited by Kate Entringer)

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