PARIS (Reuters) – Wall Street is expected to see little change as European stock markets fell mid-session on Wednesday and the dollar lost ground, a few hours before the announcement of monetary policy decisions by the United States Federal Reserve, a key event for all the markets as several indicators give hope for a slowdown in inflation.
Futures contracts on the main New York indices point to a practically unchanged opening for the Dow Jones as for the Standard & Poor’s 500 and the Nasdaq.
In Paris, the CAC 40 lost 0.38% to 6,719.44 points around 12:05 GMT. In London, the FTSE 100 fell 0.23% and in Frankfurt, the Dax fell 0.52%.
The EuroStoxx 50 index is down 0.37%, the FTSEurofirst 300 0.4% and the Stoxx 600 0.46%.
The major US indices ended in green on Tuesday but below their session highs after the announcement of a deceleration in consumer prices in the United States, the rise in the CPI index having fallen to 7.1% in november.
For most investors, this figure does not call into question the scenario of a rate hike of 50 basis points on Wednesday, but it encourages some to bet on a pause in monetary tightening as of March, and therefore on a “terminal” rate lower than expected so far.
Elsewhere, UK inflation figures released early in the day show a sharper than expected slowdown, with UK price inflation coming in at 10.7% on one while the consensus had it at 10.9. %.
Still, questions remain on the forecasts of the members of the FOMC committee, the monetary policy committee of the Fed, and on the tone that the president of the institution, Jerome Powell, will choose to give to his press conference.
Investors’ caution is also explained by recurring fears of a more marked than expected slowdown in global growth in 2023. The Managing Director of the International Monetary Fund, Kristalina Georgieva, thus declared to Agence France Presse that the IMF was “very likely” to lower its forecast for China.
WALL STREET VALUES TO FOLLOW
VALUES IN EUROPE
In Europe, among the biggest sectoral declines at mid-session are the commodity compartment, whose Stoxx index lost 1.99%, and that of transport and leisure (-1.36%).
The latter is penalized by the fall of 6.94% of the tour operator TUI, which announced its intention to carry out a capital increase to reimburse the public aid received during the COVID-19 crisis.
On the rise, Inditex, the parent company of Zara, took 2.18% after its results.
RATE
the yield on two-year US Treasury bonds, the most sensitive to changes in expectations on Fed policy, amplifies the decline that began on Tuesday after the consumer price figures: it lost more than four basis points to 4.1865%, the lowest since October 6.
The ten-year is virtually unchanged at 3.501%.
On the European market, benchmark yields are up sharply, as a result of profit taking after the bond rally of recent weeks: the ten-year German, at 1.984%, regains eight basis points and erases its decline on Tuesday.
CHANGES
The dollar remains on a downward trend against the other major currencies (-0.11%), with a majority of traders continuing to bet on a moderation in the Fed’s rhetoric and strategy.
The euro thus rose to 1.0644 dollars (+0.13%). It had reached 1.0673 on Tuesday in session, its highest level since June.
The pound sterling only briefly lost ground after the British inflation figures and is now on the rise again against the greenback (+0.16%).
OIL
Lower at the start of the session, the oil market turned higher on the back of the weaker dollar, as traders digested figures from the American Petroleum Institute (API) showing an unexpected increase in crude inventories at UNITED STATES.
Brent, which fell in the morning to 80.11 dollars a barrel, now gains 0.97% to 81.46 dollars and American light crude (West Texas Intermediate, WTI) takes 1.03% to 76.17 dollars after a more low at 74.90.
(Writing by Marc Angrand, editing by Kate Entringer)