by Blandine Henault
PARIS (Reuters) – The main European stock markets are expected to rise slightly on Thursday at the opening, after their sharp decline the day before and while the publication of the “minutes” of the Federal Reserve (Fed) did not offer any indications expected on the trajectory of interest rates in the United States in 2024.
According to the first available indications, the Parisian CAC 40 could gain 0.07% at opening. Futures contracts signal an increase of 0.07% for the Dax in Frankfurt, 0.06% for the FTSE in London and 0.17% for the Stoxx 600.
Central bank officials appear increasingly confident that inflation is under control, with lower upside risks, and have expressed concern, according to minutes of the Fed’s latest policy meeting. growing concern about the potential economic damage of an “excessively restrictive” monetary policy.
These “minutes”, however, provided little insight into the timetable for rate cuts that the Fed could follow, whose officials noted an “unusually high degree of uncertainty” for the economic horizon.
According to Quincy Krosby, head of strategy at LPL Financial, the report highlights an “uncertain” monetary policy trajectory, suggesting that expectations for a first rate cut in March may need to be revised downward.
According to the CME FedWatch barometer, the market now expects a 70% probability of a rate cut in March, compared to 90% a week ago.
In this context, investors will closely follow the publication on Friday of the official report on employment in the United States. Before that, the report from the ADP firm on the labor market and the ISM composite index for December are expected this Thursday.
In Europe, a new burst of PMI for the same month will liven up discussions in the morning.
A WALL STREET
The New York Stock Exchange ended down on Wednesday, with investors favoring profit-taking after a solid end to 2023, while the publication in the afternoon of the Fed’s “minutes” did not change the trend.
The Dow Jones index lost 0.76% to 37,430.19 points. The broader S&P-500 lost 0.80%, to 4,704.81 points. The Nasdaq Composite fell 1.18% to 14,592.21 points.
IN ASIA
For its first session of the year, the Nikkei index of the Tokyo Stock Exchange ended down 0.53% after the earthquakes which killed at least 81 people in western Japan almost 72 hours ago . The index, however, finished far from its lowest of the day after losing up to 2.3% during the session.
Energy groups that operate nuclear power plants, such as Hokuriku Electric (-2.22%) and Tokyo Electric Power Holdings (+2.23%) fell before erasing part or all of their losses. Conversely, the construction sector has climbed.
Chinese stock markets are falling despite a rather encouraging Caixan PMI indicator on services. The CSI 300 lost 1.19% and the Shanghai Stock Exchange composite index lost 0.69%.
In Hong Kong, the Hang Seng fell by 0.42%.
RATES/EXCHANGES
The yield on ten-year Treasuries increased slightly to 3.9123% after briefly exceeding 4% the day before.
For its part, the dollar is stable against a basket of reference currencies after reaching a three-week peak on Wednesday.
The euro advanced 0.1% against the dollar, to 1.0933.
OIL
Crude prices remain supported by fears of production disruption in the Middle East in the wake of conflict between Israel and Hamas in the Gaza Strip.
The barrel of Brent rose 0.75% to 78.84 dollars and that of American light crude oil (WTI) rose 0.96% to 73.4 dollars.
(Written by Blandine Hénault, with Ankur Banerjee in Singapore, edited by Nicolas Delame)
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