by Claude Chendjou

PARIS (Reuters) – Wall Street is expected to fall on Thursday and European stock markets are also downgraded mid-session in a movement of fears about the trajectory of interest rates from the major central banks following announcements from the American Federal Reserve (Fed ) and pending those of the Bank of England (BoE).

New York index futures signal Wall Street opening down 0.44% for the Dow Jones, 0.61% for the Standard & Poor’s 500 and 0.78% for the Nasdaq.

In Paris, the CAC 40 fell by 1.46% to 7,223.47 points around 10:20 a.m. GMT. In Frankfurt, the Dax lost 1.12% and in London, the FTSE lost 0.61%.

The pan-European FTSEurofirst 300 index fell by 1.02%, the Eurozone EuroStoxx 50 by 1.38% and the Stoxx 600 by 1.14%.

The Fed, as expected, maintained the fed funds rate target at 5.25%-5.50% on Wednesday, but at the same time warned that its monetary policy could remain at a restrictive level for longer. than expected, its president, Jerome Powell, believing that the battle against inflation is far from over.

The same arguments were taken up on Thursday by the Swedish and Norwegian central banks which raised their main key rates to 4.00% and 4.25% respectively, while not ruling out further increases in the cost of credit.

Among the day’s monetary policy decisions, only the Swiss National Bank opted for a status quo on rates, while announcements from the Bank of England (BoE) are expected at 11:00 GMT.

If the probability of a pause on the part of the BoE has increased, inflation having posted a surprise slowdown in August on Wednesday, questions remain about the bank’s terminal rate, which could increase by another 25, or even 50 basis points. , at 5.75%.

In the eurozone, where the European Central Bank (ECB) last week raised its deposit rate to the record level of 4%, several officials from the institution, such as Joachim Nagel and Martins Kazaks, stressed on Thursday that It was premature to anticipate a drop in the cost of credit in the bloc in the first half of 2024.

UBS said on Thursday that it expected the ECB to keep its rate levels unchanged until June 2024 before a cut of 25 basis points per quarter.

In the United States, Goldman Sachs has postponed a possible Fed rate cut until the fourth quarter of 2024.

AT WALL STREET

Fedex gained 5.7% in after-hours trading after reporting a 32% jump in adjusted profit for its fiscal first quarter, to $4.55 per share, 82 cents above consensus.

VALUES IN EUROPE

The strength of the dollar and the rise in bond yields, following expectations of a longer-than-expected monetary tightening in the United States, are weighing on the basic resources (-1.97%), energy (- 1.51%) and new technologies (-1.77%) in Europe.

Growth stocks like LVMH (-0.51%) or Kering (-0.63%) are also neglected.

On the corporate publications side, Valneva lost 3.61% after its first half results, while the annual forecasts from Next (+3.71%) and JD Sports Fashion (+6.24%) were welcomed.

Ocado fell 8.80%, Exane having lowered its advice on the value to “underperformance”.

RATE

The yield on ten-year Treasuries climbs by almost nine basis points to 4.4273%, and that on two years by around four points, to 5.1502%.

The same movement is observed in the euro zone, where the yield on the ten-year German Bund stands at 2.735%, up more than three points.

CHANGES

The dollar is at a six-month high against a basket of reference currencies, gaining another 0.30%, in reaction to the Fed’s announcements.

Against the Japanese currency, the greenback hit a new peak since November at 148.47 yen per dollar, while no change of course is expected immediately on the decisions planned for Friday by the Bank of Japan ( BoJ).

The euro is trading at 1.0661 dollars (+0.02%).

The pound sterling stands at 1.2295 dollars (-0.39%) before the BoE decisions.

OIL

The oil market is affected by the dollar and American rates which take precedence over the risk of a crude supply deficit at the end of the year: Brent drops 1.05% to 92.55 dollars per barrel and American light crude (West Texas Intermediate, WTI) also lost 1.05% to $88.72.

(Written by Claude Chendjou, edited by Blandine Hénault)

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