PARIS (Reuters) – The main European stock markets are expected on an uncertain note at the opening on Monday, as caution seems to have to be imposed on the prospect of ever higher interest rates.

The first indications available give an increase of 0.1% for the CAC 40 in Paris, 0.04% for the FTSE in London, 0.07% for the EuroStoxx 50 and a decline of 0.04% for the Dax in Frankfurt.

The main European and American indices ended in the red on Friday after the announcement of a further acceleration in the PCE inflation index, the most watched by the Federal Reserve.

Investors expect the Fed to raise rates by 25 basis points at its next meeting, but some analysts are considering the possibility of a hike of half a point if inflation remains high and growth strong.

This is for example the case of Kevin Cummins, chief economist at NatWest Markets, who estimates this probability at around 60%.

Among the important statistics expected this week, we can note the first estimate of inflation in the euro zone and the ISM services index in the United States.

VALUES TO FOLLOW:

AT WALL STREET

The New York Stock Exchange ended Friday sharply lower to close its worst week since the start of the year, as persistent inflation in the United States raised fears among investors of an even more marked than expected Fed tightening on its rates. .

The Dow Jones index fell 1.02%, or 336.99 points, to 32,816.92 points, the S&P-500 lost 42.28 points, or 1.05%, to 3,970.04 points and the Nasdaq Composite fell 195.46 points (-1.69%) to 11,394.94 points.

Over the week, the Dow lost 3.0%, the S&P-500 2.7% and the Nasdaq 3.3%. In percentages, this is the largest weekly drop since September for the Dow, which had also not experienced four consecutive weeks in the red since April-May 2022, while the S&P-500 and the Nasdaq are experiencing their worst week since December.

January statistics released by the Commerce Department showed a stronger-than-expected rebound in consumer spending amid rising wages, while inflation picked up again, the PCE consumer price index consumption registering its strongest increase since last June at +0.6%.

IN ASIA

The Nikkei lost 0.11% in the wake of Wall Street, although the weakness of the yen, favoring export-oriented stocks, limited the decline in the Japanese index.

In China, the CSI 300 fell by 0.36% and the Shanghai SSE Composite by 0.24% in a context of tensions between Beijing and Washington.

CHANGES

Against a basket of benchmark currencies, the dollar is stabilizing near a seven-week high, as a series of US statistics have reinforced the scenario that the Federal Reserve will have to raise rates further.

The market now expects US rates to peak at 5.4% in July and stay above 5% through the end of the year.

The euro, at $1.0539, is near its lowest level since January 9.

RATE

On the sovereign debt side, the yield on ten-year US government bonds fell very modestly around 3.9375% after gaining ground on Friday with data on the evolution of prices and consumption in the United States. .

OIL

The oil market is down slightly, with the level of the dollar and fears of a recession outweighing reports of a plan by Moscow to cut exports from its western ports by 25% in March.

Brent fell 0.59% to 82.67 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.54% to 75.91 dollars.

(Laetitia Volga, editing by Kate Entringer)

Copyright © 2023 Thomson Reuters