by Claude Chendjou

The main European stock markets are expected on a cautious note on Wednesday, with the markets struggling since the start of the week to find a clear direction after the recent rally born from the hope of the end of the rise in rates by the major central banks.

According to the first available indications, the Parisian CAC 40 should lose 0.27% at the opening, the Dax in Frankfurt 0.38% and the FTSE 100 in London 0.35%. The EuroStoxx 50 index is expected to fall by 0.34%.

The risk of recession in the euro zone in view of the latest PMI data and the weakness of Chinese exports gave rise to renewed risk aversion on Tuesday and concerns about the state of the global economy while an intervention by the president of the American Federal Reserve, Jerome Powell, is particularly expected this Wednesday from 2:15 p.m. GMT.

Minneapolis Fed President Neel Kashkari and his Chicago counterpart Austan Goolsbee refused Tuesday to rule out the possibility of further raising rates.

Officials from the European Central Bank (ECB) and the Bank of England (BoE) are also due to speak on Wednesday.

“There was some euphoria at the end of last week because it was thought that the Fed was done (with raising rates), that the job market was slowing and that the US economy was going to have a landing. smoothly,” notes Michael Hewson, chief market analyst at CMC Markets.

“Investors have started to become a little more lucid. There is a risk that the Fed could raise rates again,” he added.

Treasury bond yields and the dollar rose from multi-week lows on Wednesday.

Before the central bankers’ speeches, the market will have taken note of the monthly retail sales figures in the euro zone and the final inflation data in Germany in October.

A WALL STREET

The New York Stock Exchange ended up on Tuesday, with the S&P-500 and the Nasdaq recording their longest streak in the green in two years thanks in particular to growth stocks.

The Dow Jones index gained 0.17%, or 56.94 points, to 34,152.80 points.

The broader S&P-500 gained 12.40 points, or 0.28%, to 4,378.38 points.

The Nasdaq Composite advanced 121.08 points (0.90%) to 13,639.86 points.

“What the market and traders are saying, what they’re pushing for, is an end (to tightening), it’s a rate cut, as if they’re trying to force the hand” of the Fed, said Ken Polcari, director of Kace Capital Advisors.

Among the major sectors of the S&P-500, energy was the worst performer, falling more than 2% in the wake of the decline in crude prices.

The decline in bond yields benefited technology giants like Amazon, up 2.1%, Microsoft, which gained 1.1%, and Apple, up 1.5%.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index ended with a loss of 0.33% to 32,166.48 points, while the broader Topix dropped 1.16% to 2,305.95 points. The solid results of Nintendo (+6.09%) and Mazda Motor (+10.39%) however limited the decline in the indices.

The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) lost 0.30%.

In China, the Shanghai SSE Composite fell by 0.57% and the CSI 300 lost 0.69%.

VALUES TO FOLLOW IN EUROPE:

Crédit Agricole SA reported better-than-expected quarterly results on Wednesday, driven by the solid performance of its financing and investment division and retail banking activity.

EXCHANGES/RATES

The dollar, which last week recorded its biggest weekly decline in around four months, advanced 0.10% against a basket of reference currencies. The greenback is supported by cautious comments from Fed officials on rate developments.

The euro fell by 0.13%, to 1.0685 dollars, penalized by the darkening outlook in the monetary bloc.

On the bond market, the yield on ten-year US Treasury bonds gained almost three basis points, to 4.606%, after falling on Friday to 4.484% for the first time since September 26. This rate reached a 16-year peak last month, at 5.021%.

OIL

The oil market is falling further after hitting its lowest level in more than three months on Tuesday, weighed down by fears about demand from the United States and China. Chinese exports of goods fell in October and U.S. crude inventories increased last week by nearly 12 million barrels, according to sources citing figures from the American Petroleum Institute.

Brent fell 0.2% to $81.45 per barrel and American light crude (West Texas Intermediate, WTI) fell 0.41% to $77.05.

(Writing by Claude Chendjou, edited by Kate Entringer)

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