by CORENTIN CHAPRON
PARIS (Reuters) – European stock markets are expected to show slight growth at the opening on Wednesday, with investors digesting the latest comments from Federal Reserve Chairman Jerome Powell before the publication of final inflation in the euro zone.
According to the first available indications, the Parisian CAC 40 is up 0.55% at the opening. Futures contracts on the FTSE in London suggest an opening advance of 0.27%, compared to 0.24% for the Dax in Frankfurt, and 0.19% for the EuroStoxx 50.
Jerome Powell admitted on Tuesday that monetary policy makers in the United States were not confident enough in the trajectory of inflation to be able to lower rates, while the latest figures in the United States surprised on the upside.
Rebounding inflation and activity resistant to rate increases are pushing the Fed to focus solely on its price stability mandate. The central bank could therefore maintain its rates at a restrictive level for longer, a scenario already well integrated by the markets which are betting on fewer than two rate cuts in 2024.
European markets are digesting these statements, while the week is poor in indicators. The final inflation in the euro zone is only expected for March on Wednesday, and whose growth over one month should be slightly stronger than at first reading, according to the consensus.
In the United Kingdom, inflation for March and producer prices, expected at 06:00 GMT, will help markets position themselves on a rate scenario for the Bank of England, with price dynamics expected to continue to slow.
VALUES TO FOLLOW:
A WALL STREET
The New York Stock Exchange ended in disarray on Tuesday, while bond yields rose, in a context of questions about the contours of the easing of monetary policy by the Fed, with a resilient economy and persistent inflation.
The Dow Jones index gained 0.17%, or 63.86 points, to 37,798.97 points. The broader S&P-500 lost 10.41 points, or 0.21%, to 5,051.41 points. The Nasdaq Composite fell 19.77 points (0.12%) to 15,865.25 points.
Morgan Stanley gained 2.5% after reporting quarterly results that beat expectations.
Bank of America, on the other hand, fell by 3.5% following the publication of a profit for the January-March period lower than consensus.
IN ASIA
The Tokyo Stock Exchange is falling under the pressure of profit-taking before the start of the results season, and while the situation in the Middle East continues to worry the markets. The Nikkei lost 194.01 points, down 0.66% to 38,218.17 points, while the broader Topix lost 41 points, down 0.73% to 2,677.30.
Advantest lost 1.36% and Sony Group 2.09%.
Chinese markets are rising after the regulator clarified some of the new rules it plans to put in place to support equity markets. The Shanghai SSE Composite takes 1.19%, the CSI 300 0.65%.
RATE
US yields are hesitating after Jerome Powell’s latest comments.
The ten-year Treasury yield is stable at 4.6613%, while the two-year rate nibbles 1.9 bps to 4.9834%.
CHANGES
Same hesitation on the currency side in the absence of a catalyst.
In Asia, the yen strengthened by 0.05% to 154.64 yen per dollar, while the Australian dollar gained 0.08% to 0.6406 dollars.
The dollar gained 0.07% against a basket of reference currencies, while the euro remained at $1.0616 and the pound sterling at $1.242.
OIL
Crude prices are falling, as markets expect a rise in US oil inventories last week which would suggest some weakness in demand.
Brent eroded by 0.56% to $89.52 per barrel and American light crude (West Texas Intermediate, WTI) lost 0.63% to $84.82.
MAIN ECONOMIC INDICATORS ON WEDNESDAY’S AGENDA
COUNTRY GMT INDICATOR PERIOD PREVIOUS CONSENSUS
GB 06:00 March inflation 0.4% 0.6%
– over one year 3.1% 3.4%
GB 06:00 Price as of March 0.2% 0.3%
production
– over one year 0.6% 0.4%
EZ 09:00 March inflation 0.8% 0.6%
definitive
– over one year 2.4% 2.4%
(Written by Corentin Chappron, edited by Blandine Hénault)
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