by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to rise slightly on Wednesday, while European stock markets are trading in the red at mid-session, weighed down by fears over energy and inflation figures in the euro zone.
Consumer price inflation in the region in August hit a new year-on-year high of 9.1%, according to the first estimate published by Eurostat on Wednesday, which should support the arguments of European Central Bank leaders supporters significant increases in interest rates. “These data fuel concerns that ECB policymakers will implement a sharp rate hike in September, despite energy security uncertainties,” said Susannah Streeter, investment and market analyst at Hargreaves Lansdown.
In Paris, the CAC 40 fell by 0.53% to 6,177.18 around 12:05 GMT. In Frankfurt, the Dax lost 0.16% and in London, the FTSE lost 1.14%.
The pan-European FTSEurofirst 300 index fell by 0.67%, the EuroStoxx 50 of the euro zone by 0.32% and the Stoxx 600 by 0.48%.
Equity markets in Europe are at this stage following a fourth session of decline as Russia interrupted the supply of natural gas to the Old Continent on Wednesday via the Nord Stream 1 gas pipeline.
This new escalation in the economic showdown between Moscow and Brussels is fueling fears of energy rationing and recession in several EU countries.
Money markets are currently expecting a 75 basis point rise in the cost of credit in September in the United States and the euro zone.
The volatility index in Europe continues to rise, to 28.43 points.
In New York, index futures signal an opening of Wall Street up 0.07% for the Dow Jones, 0.39% for the Standard & Poor’s 500 and 0.75% for the Nasdaq.
WALL STREET VALUES TO FOLLOW
VALUES IN EUROPE In Europe, the strongest sectoral increase is for high technologies whose index advanced by 1.31%, while the energy compartment (-3.67%) shows the largest decline against a backdrop of increased risk of recession which could weigh on demand.
In values, Renault takes 1.38% after information from Reuters that the thermal pole of the diamond group could welcome the Chinese car manufacturer Geely Automobile and an oil company.
UniCredit is ahead 3.64% as the Italian bank announced that the ECB has authorized a second tranche of share buybacks worth up to one billion euros.
On the downside, TotalEnergies, at the bottom of the Paris CAC 40, fell by 4.25%, while Eni fell by 5.87% in reaction to the Italian group’s announcement of a drop in its gas deliveries from of the Russian giant Gazprom.
RATE
The ten-year German Bund yield, a benchmark for the euro zone, took around two basis points to 1.529% and the two-year yield rose three points to 1.176%.
For the month of August as a whole, the latter is currently showing an increase of more than 85 points, which would represent its strongest monthly increase since 1981, a sign that investors are preparing for a period of inflation and high interest rates. The ten-year, meanwhile, rose at this stage over the month by 65%, its best performance since 1990. In the United States, the yields of ten-year and two-year Treasuries rose respectively by 2.3 points to 3 1325% and 1.7 points to 3.4807%.
CHANGES
In foreign exchange, the euro fell back below parity with the dollar at 0.9993 (-0.19%) and was heading towards its third consecutive month of decline, the energy crisis in Europe and the increased risk of a recession in the euro zone weighing on the single currency. The dollar, up 0.2%, is again very close to its 20-year high recorded on Monday in the wake of Jerome Powell’s speech in Jackson Hole.
OIL
Oil prices are falling as OPEC+ said on Wednesday it expects a large oversupply this year, with rising prices and central bank monetary tightening weighing on demand.
In this context, the announcement by the American Petroleum Institute (API) of a more marked decline than expected in stocks of gasoline and distillate products in the United States has taken a back seat.
A barrel of Brent fell 3.33% to 96 dollars a barrel and American light crude (West Texas Intermediate, WTI) dropped 2.92% to 88.96 dollars.
(Written by Claude Chendjou, edited by Jean-Stéphane Brosse)
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