by Claude Chendjou

The main European stock markets are expected to be on a generally stable note after the recent rally born from expectations of the end of the rise in interest rates by the major central banks in view of the ebb of inflationary pressures.

According to the first available indications, the Parisian CAC 40 should lose 0.08% at the opening. The Dax in Frankfurt could nibble 0.03%. The FTSE 100 in London is expected to fall by 0.01%. The EuroStoxx 50 index is expected to fall by 0.14%.

“With the release of inflation, labor market and retail sales data for this month, and with the prospects of a rate hike by the Fed FOMC in December and January being put at zero, a huge amount of information was digested by the markets in a very short time,” note ANZ analysts.

“A period of consolidation appears warranted, especially if Fed officials oppose the recent easing of financial conditions,” they add in a note.

The session could also be marked by some volatility in the run-up to Friday’s session, characterized by the “three witches”, i.e. the expiration of certain futures contracts.

In the main economic indicators of the day are expected the “Philly Fed” activity index for the month of November, the statistics of industrial production in the United States for the month of October and the Nahb survey on the market of real estate, so much data which could provide investors with signs on the evolution of the economy.

The market is currently betting on a soft landing for the US economy, a rapid slowdown in inflation and a first rate cut from the US Federal Reserve by mid-2024.

On the monetary policy side, an intervention by Christine Lagarde, the president of the European Central Bank (ECB), as part of the annual conference of the European Systemic Risk Council, is scheduled for 11:30 a.m. GMT, while other Fed officials and the Bank of England (BoE) are also due to speak today.

A WALL STREET

The New York Stock Exchange ended slightly higher on Wednesday after data reinforced investors’ hopes that the Fed had finished its rate hike campaign, while forecasts from retailer Target contributed to optimism.

The Dow Jones index gained 0.47%, or 163.51 points, to 34,991.21 points.

The broader S&P-500 gained 7.18 points, or 0.16%, to 4,502.88 points.

The Nasdaq Composite advanced 9.46 points (0.07%) to 14,103.84 points.

Communication services rose, notably driven by gains at Walt Disney following reports that activist fund ValueAct Capital had taken a stake in the entertainment giant.

Target jumped 17.8%, recording its largest percentage gain since August 2019, after reporting a better-than-expected profit forecast for the current quarter.

Other retailers, including Macy’s and Kohl’s, also ended up 7.5% and nearly 9% respectively, in the wake of Target.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index ended down 0.33% at 33,408.65 points, while the broader Topix fell 0.19% to 2,368.62 points.

The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) lost 0.20% but has gained 7.1% at this stage since the start of the month.

In China, the Shanghai SSE Composite lost 0.43% and the CSI 300 lost 0.68%.

VALUES TO FOLLOW IN EUROPE:

EXCHANGES/RATES

The dollar, which gained 0.31% on Wednesday, continued its rise on Thursday, gaining 0.15% against a basket of reference currencies after its plunge of 1.5% on Tuesday, linked to the slowdown in American inflation. The greenback owes its rise to the strengthening of the scenario of a soft landing for the American economy.

“Even though inflation is falling, the economy remains robust, which could even allow the Fed to raise rates if it wishes,” although there does not currently appear to be any appetite for a rise among Fed officials, explains James Kniveton, trader at Convera.

The euro dropped 0.09%, to 1.0836 dollars, while the pound sterling stood at 1.2395 dollars (-0.19%).

On the bond market, the yield on ten-year US Treasury bonds fell by almost four basis points, to 4.496%, compared to closing at 4.537% the day before.

OIL

The oil market is affected by signs of an increase in US crude production, while Chinese demand worries, with oil refineries in China idling in October.

Brent fell by 0.58% to $80.71 per barrel and American light crude (West Texas Intermediate, WTI) by 0.63% to $76.18.

MAIN ECONOMIC INDICATORS ON THE AGENDA FOR NOVEMBER 16

COUNTRY GMT INDICATOR PERIOD PREVIOUS CONSENSUS

USA 1:30 p.m. Activity index “Philly November -9.0 -9.0

Fed”

USA 1:30 p.m. Unemployment registrations week. at 11 220,000 217,000

november

USA 2:15 p.m. Industrial production October -0.3% +0.3%

– over one year na +0.08%

(Written by Claude Chendjou, edited by Jean-Stéphane Brosse)

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