PARIS (Reuters) – The main European stock markets are expected to rise at the opening on Wednesday after the publication of inflation figures in the United States, which fell more than expected by observers.

The first available indications suggest that the Parisian CAC 40 will increase by 0.10% at opening. Futures contracts on the FTSE in London suggest an advance at the hesitant opening, against an increase of 0.1% for the Dax in Frankfurt, and of 0.12% for the EuroStoxx 50.

The US Consumer Price Index (CPI) recorded zero growth (0.0%) last month after an increase of 0.4% in September, and growth of 3.2% year-on-year, after an increase of 3.7% in September, the Labor Department announced.

Economists forecast 0.1% monthly growth and 3.3% year-on-year, while core inflation also slowed.

This supports the markets’ scenario, which believes that terminal rates have been reached and that the Federal Reserve will lower rates sooner than it previously announced.

“This report supports equities, credit and duration, in particular by reducing the risk that the markets feared the most: excessive tightening,” summarizes Florian Ielpo, head of research at Lombard Odier AM.

“(US) retail sales will be the second key piece of news this week – watch out for a big gap that could derail this rosy story of disinflation and positive growth.”

Furthermore, stronger than expected growth in retail sales in China and industrial production supports European markets.

VALUES TO FOLLOW:

A WALL STREET

The New York Stock Exchange ended sharply higher on Tuesday, with the Nasdaq having increased by more than 2%, while data on inflation in the United States fueled the hypothesis of an end to the monetary tightening cycle of the Fed.

The Dow Jones index gained 1.43%, or 489.83 points, to 34,827.70 points. The broader S&P-500 gained 84.15 points, or 1.91%, to 4,495.70 points. The Nasdaq Composite advanced 326.64 points (2.37%) to 14,094.38 points.

IN ASIA

The Tokyo Stock Exchange ended higher on Wednesday, in the wake of Wall Street, thanks to solid corporate results and the more conciliatory attitude of the American Federal Reserve. The Nikkei index gained 2.52% to 33,519.70 points and the broader Topix gained 1.19% to 2,373.23 points.

Refiner Idemitsu Kosan jumped about 18.4% after raising its profit forecast and announcing a stock split, supporting the oil and coal producers sector, which rose 6.42%.

Chinese indices rebound after the publication of American inflation, improving retail sales in October and a plan to support the real estate market of 137 billion dollars, revealed by Bloomberg. The Shanghai SSE Composite takes 0.33%, the CSI 300 0.48%, the Hong Kong Hang Seng index 3.04%.

RATE

US yields are stable after collapsing on Tuesday following the release of US inflation data.

The ten-year Treasury yield is stalling at 4.4414% after losing 22 bps on Tuesday, while the two-year rate is nibbling 1.9 bps to 4.8357%.

CHANGES

The dollar is stable after having suddenly weakened on Tuesday against a basket of currencies, the decline in inflation in the United States raising hopes of a faster than expected reduction in rates from the Federal Reserve.

The dollar rose 0.08% against a basket of reference currencies, while the euro lost 0.06% to $1.0872, and the pound sterling 0.08% to $1.2487.

In Asia, the yen fell 0.2% to 150.68 yen per dollar, while the Australian dollar lost 0.06% to 0.6502 dollars.

OIL

Oil is up moderately after the publication of stronger-than-expected Chinese retail sales and industrial production data.

Brent rose 0.4% to $82.8 per barrel, with American light crude (West Texas Intermediate, WTI) gaining 0.38% to $78.56.

(Written by Corentin Chappron, edited by Tangi Salaün)

Copyright © 2023 Thomson Reuters