by Claude Chendjou

PARIS (Reuters) – Wall Street is expected to be stable on Wednesday at the opening while European stock markets move in small variations at mid-session pending decisions in the evening from the United States Federal Reserve (Fed) and the Bank of England (BoE) on Thursday. Futures on New York indices signal an opening of Wall Street up 0.06% for the Dow Jones, down 0.02% for the Standard & Poor’s 500 and down 0.14% for the Nasdaq. In Paris, the CAC 40 advanced by 0.38% to 7,139.75 points around 12:10 GMT. In Frankfurt, the Dax takes 0.56% and in London, the FTSE nibbles 0.04%.

The pan-European FTSEurofirst 300 index rose 0.3%, the eurozone’s EuroStoxx 50 0.48% and the Stoxx 600 0.34%.

Volatile equity markets in Europe are struggling to find a clear direction after two consecutive sessions of gains resulting from an easing of tensions around the banking sector following the rescue of Credit Suisse and reassuring words from authorities, notably Janet Yellen, on the soundness of the financial system.

Investors are now awaiting the Fed’s monetary policy statement, which will be published at 6:00 p.m. GMT and especially the declarations of its chairman, Jerome Powell, expected half an hour later, on inflation and the path of interest rates. .

If a Fed rate hike of 25 basis points in the immediate term is practically no longer in doubt with regard to the CME Group’s Fedwatch barometer, the peak in the cost of credit still raises questions.

“Markets are keenly aware that the Fed is caught between a rock and a hard place, with officials facing an apparent dilemma between financial stability or price stability,” said Han Tan, market analyst at Exinity Group. .

“If the ‘dot plot’ (point diagram which represents the estimates concerning the evolution of interest rates, editor’s note) indicate a terminal rate higher than the 5.1% forecast by the officials of the FOMC (monetary policy committee of the Fed) in December, this could trigger a new wave of risk aversion in the stock market.

In Britain, where a pause in the Bank of England’s (BoE) rate hike was being considered, the surprise reacceleration of inflation to 10.4% year on year in February rekindled uncertainty about future decisions. term forecast Thursday by the central bank. Money markets are now pricing with a 100% chance of a BoE rate hike of at least a quarter point this month.

The European Central Bank (ECB), which decided this month to raise rates by 50 basis points, despite the turmoil in the banking sector, is also being watched by investors. Its president, Christine Lagarde, said Wednesday that the institution could be more aggressive if banks become more risk averse and start charging higher rates for borrowing. WALL STREET VALUES TO FOLLOW

Nike fell 1.6% in pre-market after the announcement by the sports equipment supplier Tuesday evening of margins under pressure due to major promotions intended to reduce its inventories.

First Republic Bank fell 3.7% after an initial gain amid lingering fears over the bank’s financial health.

VALUES IN EUROPE

Among the major compartments of the European rating, real estate (-3.02%), sensitive to variations in interest rates, shows the largest sectoral decline, falling to a five-month low. The banking index, which has gained 5% over the last two sessions, is still progressing (+ 1.79%), at the top of the Stoxx 600.

On the downside, basic resources (-0.43%) and energy (-0.09%) were neglected amid fears for demand and rising crude inventories in the United States.

In individual stocks, Ubisoft gained 2.08% as HSBC’s recommendation to “buy” was raised, while Marks and Spencer Group climbed 4.55%, with Citi also switching to “buy” on the UK distributor.

CHANGES

The dollar remains close to its lowest level in five weeks (-0.12%) against a basket of reference currencies before the Fed’s decisions.

The euro took the opportunity to rise to 1.0797 dollars (+0.28%)

The pound sterling, driven by inflation figures in the United Kingdom, advanced 0.49% to 1.2274 dollars.

RATE

Yields on ten-year and two-year US Treasury bonds continue to rise, to 3.62% (+1.5 basis points) and 4.23% (+5.4 points) respectively, with the ebb of fears over the banks.

In Europe, the ten-year and two-year German Bund yields rose respectively by 8.6 basis points to 2.36% and 13.8 points to 2.71% after statements by Christine Lagarde and Philip Lane.

OIL

Oil prices retreat on signs of weaker demand and anticipation of the Fed: Brent fell 0.5% to $74.94 a barrel and US light crude (West Texas Intermediate, WTI) also fell 0.57% to $69.27.

NO MORE MAJOR ECONOMIC INDICATOR ON TODAY’S AGENDA

(Written by Claude Chendjou, edited by Blandine Hénault)

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