by Claude Chendjou
PARIS (Reuters) – The main European stock markets are expected to fall on Thursday at the opening, as investors continue to show caution ahead of monetary policy announcements in the euro zone and the United Kingdom and after the statements of the President of the Reserve federal government (Fed) which deemed it premature to mention a reduction in interest rates.
Index futures suggest a decline of 0.65% for the CAC 40 in Paris, 0.64% for the Dax in Frankfurt, 0.35% for the FTSE 100 in London and 0.73% for the EuroStoxx 50.
The Fed on Wednesday announced a half-point hike in its key interest rate and shared new economic projections that will imply at least additional rate hikes of 75 basis points in 2023 and very limited growth in the currency. American economy.
Fed Chairman Jerome Powell’s remarks at the conference following the announcements were seen not only as restrictive but also arousing fears of a recession, causing the yield curve to invert even further. yields between short-term bonds and long-term bonds.
“This is a very ‘hawkish’ message from the Fed: a terminal rate significantly higher than in September with also a real upside risk,” the TD Securities analysts wrote in a note, referring to the projection by the Fed of a rate peak above 5%, a level not seen since the severe economic recession of 2007.
Interest rate hikes of 50 basis points from the European Central Bank (ECB), the Bank of England (BoE) and the Swiss National Bank (SNB) are also expected on Thursday.
In terms of economic statistics, investors will take note at 12:30 p.m. of monthly data on retail sales in the United States. The Reuters consensus calls for a contraction of 0.1% month-on-month after a 1.3% gain in October.
In China, retail sales fell 5.9% in November, the sharpest contraction since May, while industrial production slowed to 2.2% year on year and real estate investment fell by 19.9%, at a low of more than 20 years.
VALUES TO FOLLOW IN EUROPE:
Hennes & Mauritz (H&M) on Thursday reported a 10% increase in net sales year on year for its fourth fiscal quarter, running from September to November, a figure slightly above market expectations.
AT WALL STREET
The New York Stock Exchange ended lower on Wednesday, after a volatile session, after the Fed decided to raise interest rates by 50 basis points, as expected, but saying it expected higher rates for a longer duration.
The Dow Jones index fell 0.42%, or 142.29 points, to 33,966.35 points.
The broader S&P-500 lost 24.33 points, or 0.61%, to 3,995.32 points.
The Nasdaq Composite fell for its part by 85.93 points (0.76%) to 11,170.89 points.
On the Tokyo Stock Exchange, the Nikkei index ended down 0.37% at 28,051.7 points and the broader Topix fell 0.18% to 1,973.9 points, dampened by concerns over the Fed projections.
In China, the Shanghai SSE Composite fell 0.25% and the CSI 300 fell 0.07% after data showed further deterioration in the Chinese economy.
In Asian trading, the yield on ten-year US bonds fell to 3.49% and that of two years to 4.24%, while the “spread” between these two maturities fell to -75.2 points, an inversion signaling a recession on a short-term horizon.
In Europe, the ten-year German Bund yield, which ended Wednesday up at 1.93%, supported by information from Reuters that the forecasts presented Thursday by the ECB will include inflation still above 2% in 2025, takes another five points on Thursday to 1.98%.
The prospect of a rise in rates in the United States for a long period supports the dollar, which is up 0.22% against a basket of benchmark currencies.
The euro fell to 1.0653 dollars (-0.27%) and the pound dropped 0.29% to 1.2385 dollars before the decisions of the ECB and the BoE.
Oil prices are on a downward trend in Asian trade with the strength of the dollar, while the prospect of continued monetary tightening by central banks is causing fears about demand.
Brent lost 0.79% to 82.05 dollars a barrel and American light crude (West Texas Intermediate, WTI) 0.98% to 76.52 dollars.
(Written by Claude Chendjou, edited by Matthieu Protard and Blandine Hénault)
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