PARIS (Reuters) – The main European stock markets are hesitant but seen down on Thursday at the opening after the Fed raised the day before as expected its main interest rate and paved the way for a possible pause, while the ECB meets later in the day and is also expected to raise rates by a quarter point.

According to available indications, the Parisian CAC 40 could fall by 0.33% at the opening, the Dax in Frankfurt by 0.24% and the FTSE in London by 0.37%.

The European Central Bank (ECB) is also expected to announce a 25 basis point rate hike on Thursday, the tightening of bank credit in the euro zone and the slowdown in core inflation in April, two key indicators known the day before, pleading according to analysts for a limited increase.

The crisis of confidence in banks after the Credit Suisse debacle just over a month ago also argues for a softer approach from Frankfurt to avoid putting the sector in trouble. .

The US Federal Reserve (Fed) said Wednesday after its two-day monetary policy meeting that it was raising its main interest rate by 25 basis points, as expected, and paved the way for a possible pause in its rate hike campaign.

However, recalling that he still aims to control inflation, Jerome Powell, the head of the Fed, indicated that it was premature to say that the rate hike campaign was over.

An end to a cycle of rising interest rates that has hurt the market may be in sight, but uncertainty over equity valuations and the economic outlook is keeping investors on edge and fearing further turbulence .

In theory, this should be good news for stocks and other so-called risky assets, which faltered under the barrage of rate hikes last year. Still, some investors worry that the 6.5% rebound in the S&P 500 this year has made stocks expensive. Many also fear that the Fed’s rate hikes will precipitate a recession later this year.

VALUES TO FOLLOW:

AT WALL STREET

The New York Stock Exchange ended lower on Wednesday, seeing the gains posted during the session fade as comments from Federal Reserve (Fed) Chairman Jerome Powell left investors uncertain about the US central bank rate hike campaign.

The Dow Jones index fell 0.80%, or 270.29 points, to 33,414.24 points.

The broader S&P-500 lost 28.83 points, or 0.70%, to 4,090.75 points.

The Nasdaq Composite fell for its part by 55.18 points (0.46%) to 12,025.33 points.

IN ASIA

The Tokyo Stock Exchange is closed until the end of the week on the occasion of “Golden Week”.

Stock markets in Shanghai and Hong Kong were up on Thursday on gains in the financial and public enterprise sectors after the May Day recess.

The SSE Composite in Shanghai rose 0.6%, while the large cap CSI 300 in mainland China fell 0.1%.

China’s manufacturing activity fell to 49.5 in April from 50.0 in March due to weak domestic demand, suggesting a slowdown in the manufacturing sector. The threshold of 50 separates contraction and expansion of activity.

RATE

Overall bonds broadly flat as markets fully priced in the Fed rate hike.

The ten-year German fell 0.4 basis points to 2.2460%. Its US equivalent yields 4 basis points basis points to 3.3543%.

CHANGES

The dollar was down against major currencies on Thursday after the Fed opened the door to a pause in its aggressive tightening cycle.

The dollar fell 0.2423% against a basket of benchmark currencies.

OIL

Oil prices recovered slightly on Thursday, but could not make up for the more than 9% drop recorded in the previous three days on concerns about demand in major consuming countries.

A barrel of Brent rose 0.73% to 72.86 dollars and a barrel of American light crude rose 0.31% to 68.9 dollars.

(Written by Kate Entringer)

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