The Stock Exchange building in London, Great Britain
(Technical report, no change to the text)
by Diana Mandia
(Reuters) – Wall Street is expected to be in the green on Thursday and European stock markets are moving cautiously upwards at mid-session before the decision of the European Central Bank (ECB) on interest rates in the euro zone.
New York index futures signal Wall Street opening up 0.3% for the Dow Jones, 0.41% for the Standard & Poor’s-500 and 0.46% for the Nasdaq.
In Paris, the CAC 40 rose 0.29% to 7,243.34 points. In Frankfurt, the Dax gained 0.13% and in London, the FTSE gained 1.09%.
The pan-European FTSEurofirst 300 index is up 0.55%, the Eurozone EuroStoxx 50 gains 0.33% and the Stoxx 600 0.51%.
Investors are torn between the hope of a pause in rate hikes from the US Federal Reserve (Fed), as underlying inflationary pressures in the United States appear to be moderating, and the prospect of a rate hike by the European Central Bank (ECB) this Thursday for the tenth consecutive time and at an unprecedented level in the euro zone.
The Frankfurt institute will publish its monetary policy statement at 12:15 GMT, followed half an hour later by a press conference by its president, Christine Lagarde.
Analysts are hesitating between a pause and a 25 basis point hike that would take the deposit rate to 4.0%, the highest level since the euro’s launch in 1999, but since a source reported Reuters that the ECB forecast inflation of more than 3% in the euro zone in 2024, fears of a further increase in the cost of credit have strengthened.
The markets now assess the probability of an increase at 65%, compared to around 40% on Monday.
The impact of the rise in the cost of credit on the economy, however, moderates traders’ outlook on the future evolution of rates.
“The gloomy economic outlook leads investors to believe that even if the ECB raises rates today, it will almost certainly be the last time, and that in less than a year we will be talking about the first rate cut in Europe due to of economic weakness,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
VALUES TO FOLLOW AT WALL STREET
The New York Stock Exchange is expected to be in the green at the open, supported by growing optimism about a pause in the Fed’s interest rate hikes in September.
Investors will closely follow the stock market debut of Arm, the largest IPO in the United States since 2021. The British chip designer owned by Japanese conglomerate SoftBank Group Corp is targeting a valuation of $54.5 billion.
VALUES IN EUROPE
Uncertainty over interest rates and concerns over oil supplies boost the defensive health sector and those of energy and basic resources, which gain 0.59%, 1.62% and 3 .56% respectively.
German auto stocks, heavily exposed to China, send the auto sector down 1% after Beijing warned the European Commission that its investigation into Chinese subsidies for electric vehicles could harm trade relations.
Porsche, which counts China as its largest market, lost 2.49% and BMW 1.57%.
In Paris, the oil group TotalEnergies, up 1.07%, is among the leading stocks in the CAC 40, while Rémy Cointreau (-3.2%) and Pernod-Ricard (-2.09%) are penalized. by lowering the recommendation.
Bouygues gained 2.1%, benefiting from Exane BNP Paribas’s recommendation increase to “outperformance” from “neutral”, while Fnac Darty lost 1.9%, penalized by the withdrawal of its senior bond issue offering of 300 million euros the day after its announcement.
Elsewhere in Europe, Deliveroo takes 2.34%, Sachem Capital having raised the hypothesis according to which the British meal delivery group could be the target of a takeover.
RATE
The yield on the 10-year German Bund fell slightly before the ECB’s announcements, to 2.639%, while the two-year yield stood at 3.157%.
After having already lost ground on Wednesday due to the moderation of underlying inflationary pressures in the United States, the American bond markets are stable, with a yield on 10-year Treasuries at 4.2604% and that on two years at 4 .9797%.
CHANGES
The dollar is also stable (-0.06%) against a basket of reference currencies after the data on American inflation published on Wednesday and the fall in Treasury bond yields, while the euro gains 0.06 % to 1.0734 dollars.
OIL
Oil prices are starting to rise again with the prospect of a tightening of supply over the rest of the year.
Brent rose 1.12% to $92.91 per barrel, with American light crude (West Texas Intermediate, WTI) increasing 1.14% to $89.53.
(Written by Diana Mandiá)