by Blandine Henault

(Reuters) – The main European stock markets are expected to rise on Thursday at the opening after the Federal Reserve’s new status quo on its rates which suggests the end of its cycle of monetary tightening.

According to the first available indications, the Parisian CAC 40 could gain 0.53% at opening. Futures contracts report a gain of 0.56% for the Dax in Frankfurt, 0.44% for the FTSE in London and 0.43% for the Stoxx 600.

As expected, the Fed left the target for “fed funds” rates at 5.25%-5.50% on Wednesday evening after already a pause decided during its previous meeting in September, fueling expectations that the central bank American is done with rate hikes.

During a press conference, its president, Jerome Powell, did not rule out further tightening and stressed that the stricter financial conditions could weigh on the institution’s decisions if they persist.

“While on the surface Powell was trying to be hawkish, the markets didn’t buy it,” said Michael Hewson, head of market analysis at CMC Markets UK.

Investors are now turning to the Bank of England which will announce its decision on rates at 12:00 GMT, after new PMI indices in Europe and before the publication of Apple results in the evening.

A WALL STREET

The New York Stock Exchange ended up on Wednesday, at the end of a turbulent session, while the Fed announced as expected to keep its interest rates unchanged and its president’s comments reassured investors, even if he did not rule out the possibility of additional increases.

The Dow Jones index gained 0.67% to 33,274.58 points. The broader S&P-500 gained 1.05% to 4,237.86 points. The Nasdaq Composite advanced 1.64% to 13,061.47 points.

Futures on all three indexes are reporting a slightly positive open on Thursday.

IN ASIA

The Tokyo Stock Exchange ended up 1.1% in the wake of Wall Street and the Fed’s announcements and thanks to a jump in stocks linked to semiconductors. The Nikkei, which exceeded the threshold of 32,000 points during the session for the first time since October 18, gained 3.09% over the week, the Tokyo Stock Exchange being closed on Friday for a public holiday.

In China, the stock markets are struggling to follow the generalized upward movement and have erased their initial gains: the CSI 300 fell by 0.36% and the composite index of the Shanghai Stock Exchange lost 0.29%.

RATES/EXCHANGES

US bond yields continue to fall after the Fed’s announcements. The ten-year rate fell by more than six basis points, to 4.7322%, and the two-year rate dropped one point, to 4.9664%.

The dollar fell in the wake of the Fed’s yields and announcements and lost 0.48% against a basket of reference currencies.

The euro took advantage of this to return to almost 1.06 dollars.

OIL

Crude prices are increasing after three consecutive sessions of decline, driven by the renewed appetite for risky assets following the Fed’s announcements.

A barrel of Brent gained 0.85% to $85.35 and that of American light crude (WTI) gained 0.91% to $81.17.

(Written by Blandine Hénault)

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