Slight rise in sight in Europe, the Fed to follow


PARIS (Reuters) – The main European stock markets are expected to rise at the opening on Wednesday after several sessions in the red, but caution should limit spreads as decisions by the United States Federal Reserve approach, which could accelerate the rise in its rates against inflation.

The first indications available indicate an increase of 0.19% for the Parisian CAC 40, 0.28% for the Dax in Frankfurt, 0.08% for the FTSE in London and 0.29% for the EuroStoxx 50.

The CAC 40 and the Stoxx 600 remain for the moment on six consecutive declines which made them fall on Tuesday to their lowest level since the beginning of March.

Following the publication last Friday of higher than expected inflation in the United States, investors have considerably revised their expectations of the Fed’s rate hikes. According to the CME Group’s Fedwatch barometer, the markets estimate a 99% probability of a rate hike of 75 points on Wednesday, compared to less than 4% a week ago.

The prospect of a marked tightening of the Fed’s policy and the inversion at the start of the week of the two- to ten-year segment of the US yield curve have raised fears of a recession in the United States.

The Fed’s announcements are expected for 6:00 p.m. GMT followed half an hour later by Fed Chairman Jerome Powell’s press conference.

Before that, a few indicators will animate the session, in particular retail sales in May in the United States (12:30 GMT).

AT WALL STREET

The New York Stock Exchange ended in disarray on Tuesday, after a choppy session, ahead of the long-awaited statement from the US Federal Reserve (Fed) after its monetary policy meeting, investors awaiting clues to the stringency of its measures in the face of inflation.

The Dow Jones index fell 0.50% to 30,364.83 points, the S&P-500 lost 0.38% to 3,735.48 points and the Nasdaq Composite rose 0.18% to 10,828.35 points.

The S&P-500 ended in the red for a fifth consecutive session, a series not seen since early January, confirming that it is in the “bear market”.

On the stock side, FedEx jumped 14.41% after raising its quarterly dividend by more than 50% and Oracle rose 10.41% following the publication of quarterly results that beat expectations.

Futures contracts give a slightly higher opening session.

IN ASIA

The Nikkei on the Tokyo Stock Exchange fell 0.92% amid investor nervousness ahead of the Fed’s monetary policy decision.

In China, the Shanghai SSE Composite rose 1.78% and the CSI 300 gained 2.45%, supported by strong capital inflows, as investors continued to bet on a policy to support the economy.

Positive news for the market: the unexpected increase in industrial production in May and the less marked drop than expected in retail sales.

EXCHANGES/RATES

The index which measures the fluctuations of the dollar against a reference basket is down 0.18% after having posted the highest level since December 2002 the day before.

“Given current market expectations…it will take more than a 75 basis point Fed rate hike or a sign of a 100 basis point hike in July to drive the dollar significantly higher. significant,” the CBA analysts said.

The euro rises to 1.0426 dollars.

On the government bond market, the US ten-year yield fell nearly five basis points, to 3.4445%, before the Fed’s decisions. It reached its highest level since April 2011 at 3.498% on Tuesday.

OIL

The oil market is evolving without much change: Brent takes 0.22% to 121.44 dollars a barrel and American light crude (West Texas Intermediate, WTI) 0.21% to 119.18 dollars.

(Written by Laetitia Volga, edited by)

by Laetitia Volga



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