by Augustin Turpin
(Reuters) – Wall Street is expected to be in disarray on Thursday and European stock markets are down slightly at mid-session, investors continuing to bet on a drop in interest rates, while the dollar fell to its highest level low for five months. New York index futures signal Wall Street opening down 0.15% for the Dow Jones, 0.01% for the Standard & Poor’s-500 and 0.21% for the Nasdaq.
In Paris, the CAC 40 lost 0.43% to 7,539.61 points around 11:30 GMT. In Frankfurt, the Dax lost 0.16% and in London, the FTSE was in balance.
The pan-European FTSEurofirst 300 index dropped 0.08%, the Eurozone EuroStoxx 50 0.18% and the Stoxx 600 0.05%.
The lack of catalysts in the news hasn’t stopped investors from continuing to bet on a rapid Fed interest rate cut next year.
Markets anticipate a first rate cut from the Fed in March, for a total easing of around 157 basis points next year.
“The rapid decline in inflation should lead the Fed to quickly and early cut its policy rate from a level that most participants will soon consider far from reality,” analysts at Goldman Sachs said in a note.
“We forecast three consecutive reductions of 25 basis points in March, May and June, followed by one reduction per quarter until the funds rate reaches 3.25-3.5% in the third quarter of 2025. Our forecast imply five reductions in 2024 and three additional reductions in 2025,” the note states.
New jobless claims in the United States, the only data that could potentially drive the markets this Thursday, are expected at 1:30 p.m. GMT.
VALUES TO FOLLOW AT WALL STREET
Chinese groups listed in the United States are progressing before the opening, while Chinese indices posted their best performance in five months on Thursday. Alibaba, Pinduoduo, and JD.COM advance between 1.5% and 3.6% in pre-market trading.
RATE
Bond yields in the euro zone were mixed on Thursday but remained near their lowest levels in several months in limited trading conditions, with markets counting on upcoming reductions in interest rates.
“The main driving force behind the moves is the expectation of rate cuts from major central banks,” said Amanda Sundström, an analyst at SEB.
“Things have been moving quite quickly and I think this will continue until we get new data early in the year,” she added.
The ten-year German Bund yield lost 2.5 basis points to 1.925%.
In the United States, the yield on Treasury bills of the same maturity fell 2.9 basis points to 3.8183%.
CHANGES
The dollar retreats on Thursday as the Japanese yen, euro and pound hit their highest level against the greenback in five months, as markets are boosted by expectations of a sharp interest rate cut of the Fed in 2024.
The dollar fell 0.28% against a basket of reference currencies, while the euro gained 0.14% to 1.1118 dollars.
OIL
Oil prices are falling amid easing concerns over shipping disruptions in the Red Sea, although tensions in the Middle East continue to fester.
Brent dropped 1.05% to $78.81 per barrel, while American light crude (West Texas Intermediate, WTI) lost 1.09% to $73.3.
(Some data may have a slight lag)
(Writing by Augustin Turpin, edited by Kate Entringer)
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