PARIS (Reuters) – The main European stock markets are expected to be mixed at the opening on Thursday, while the American Federal Reserve hammers home its restrictive message and several crucial indicators are expected this week.
The first available indications indicate that the Parisian CAC 40 would decline by 0.15% at opening. Futures contracts on the FTSE in London suggest an opening increase of 0.18%, compared to 0.22% for the Dax in Frankfurt, and a stable EuroStoxx 50.
The Fed will keep its rates higher for longer than the markets anticipated, and American monetary policy makers continue to reiterate this posture.
Neel Kashkari, president of the Minneapolis Fed, reiterated on Wednesday that further rate increases could be necessary, the resistance of the American economy justifying an additional tightening of monetary conditions.
Adding to investor caution, Chicago Fed President Austan Goolsbee is scheduled to speak at 1:00 p.m. GMT on Thursday, while Fed Chairman Jerome Powell will speak at 8:00 p.m. GMT.
“The problem is not the continued rise in rates, but rather the ability to lower rates, but the market continues to reduce the extent of rate cuts in 2024/25,” note ING rate strategists .
“This increases the implicit floor for American and eurozone market rates, and (…) there has not been much evidence to disprove this reading.”
As such, investors will carefully follow the series of data expected for the weekend in the United States: orders for durable goods, final GDP for the second quarter and unemployment claims on Thursday, PCE inflation, spending consumption and the Michigan sentiment index on Friday.
Complicating the work of central banks, oil has also returned to its highest level in a year, raising fears of a new surge in energy prices which would spread to the rest of the consumption basket, despite restrictive key rates.
A WALL STREET
The New York Stock Exchange ended in disorganized order on Wednesday, at the end of a day of ups and downs, while investors were hesitant to show their appetite the day after a session in the red due to the peak of bond yields and the prospect of higher rates for longer.
The Dow Jones index lost 0.20%, or 68.61 points, to 33,550.27 points. The broader S&P-500 gained 0.98 points, or 0.02%, to 4,274.51 points. The Nasdaq Composite advanced 29.24 points (0.22%) to 13,092.85 points.
IN ASIA
Japanese markets are falling under pressure from the Fed’s restrictive speech. The Nikkei lost 2.01% to 31,722.53 points, the Topix falling 1.66% to 2,340.12 points.
Among individual stocks, Softbank and Matsui Securities posted the worst performances on the Nikkei, down 4.36% and 3.73%, while Chugai Pharmaceutical gained 3.59%, the best performance on the index.
Chinese markets are hesitant before a week-long close, on the occasion of national holidays. The Shanghai SSE Composite nibbles 0.13%, the CSI 300 loses 0.28%, and the Hong Kong Hang Seng index 1.04%.
CHANGES
The Fed’s restrictive stance supports the greenback, with currency markets remaining calm in a wait-and-see environment.
The dollar remains stable against a basket of benchmark currencies, at its strongest level in almost a year, with the euro stalling at $1.0503, after hitting a nine-month low during the session . The pound sterling remains at $1.2138.
In Asia, the yen gained 0.21% to 149.31 yen per dollar, with markets deeming intervention by the Bank of Japan likely to support the currency, while the Australian dollar rose 0.38% to 0. 6376 dollars.
RATE
US yields halted their progression and fell moderately, awaiting comments from Jerome Powell on Thursday.
The ten-year Treasury yield fell 2.7 bp to 4.5994%, while the two-year rate fell 2 bp to 5.1208%.
OIL
Oil returns to record levels, Brent reaching its highest level since October 2022, an unexpected drop of 2.2 million barrels in American crude stocks – against a drop of 0.32 million anticipated by the consensus – having revived the fears of an imbalance between supply and demand.
Brent advanced 0.86% to $97.38 per barrel, with American light crude (West Texas Intermediate, WTI) gaining 1.05% to $94.66.
(edited by Nicolas Delame)
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