PARIS (Reuters) – The main European stock markets are expected to be hesitant at the opening on Wednesday, with investors awaiting the publication of inflation in the euro zone and the United States on Thursday, after encouraging comments from Federal Reserve officials.
The first available indications indicate that the Parisian CAC 40 would appear without a marked direction at opening. Futures contracts on the FTSE in London suggest a decline at the opening of 0.29%, against a stable Dax in Frankfurt, and a EuroStoxx 50.
The markets are focused on Thursday’s publication of inflation in the euro zone and PCE inflation in the United States, the Fed’s favorite indicator of price dynamics.
Investors expect the figures to confirm the decline in inflation, which remains above the target of central banks on both sides of the Atlantic but has fallen sharply from its peaks reached during this cycle, under the effect of restrictive monetary policies.
On Wednesday, inflation in Germany, the euro zone’s largest economy, is expected at 1:00 p.m. GMT and will give a first indication of the evolution of price dynamics in the bloc.
On Tuesday, several members of the Fed’s board of governors spoke out, encouraging investors to bet that rate cuts were near.
Christopher Waller said he was “increasingly confident” that the current level of interest rates will be sufficient to bring inflation down to 2% and did not rule out a fall in the cost of credit in the coming months.
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, also declared that inflation was falling at a rate not seen in 71 years.
The markets are now betting on a first cut of 25 basis points from May 2024, compared to June previously.
VALUES TO FOLLOW:
A WALL STREET
The New York Stock Exchange ended slightly higher on Tuesday as investors reacted to contrasting comments from Fed officials on the monetary policy of the American central bank and better than expected data on consumer confidence.
The Dow Jones index gained 0.24%, or 83.51 points, to 35,416.98 points. The broader S&P-500 gained 4.46 points, or 0.10%, to 4,554.89 points. The Nasdaq Composite advanced 40.73 points (0.29%) to 14,281.76 points.
IN ASIA
The Tokyo Stock Exchange ended lower on Wednesday. The Nikkei index lost 0.26% to 33,321.22 points and the broader Topix lost 0.52% to 2,364.34 points.
Recruitment agency Recruit Holdings gained 1.97%. Chipmaking equipment maker Tokyo Electron rose 0.33%.
Chinese indices fell on Wednesday, led by the decline of delivery giant Meituan as it expressed concern about the outlook for consumption in the fourth quarter. The Shanghai SSE Composite fell 0.57%, the CSI 300 0.95%, the Hong Kong Hang Seng index 2.4%.
RATE
US yields fall after encouraging comments from the Fed.
The ten-year Treasury yield fell 6 bps to 4.2763%, while the two-year rate fell 5.1 bps to 4.6847%.
CHANGES
The dollar is eroding as investors bet that the Fed’s rate cuts will come sooner than expected.
The dollar declined by 0.10% against a basket of reference currencies, while the euro gained 0.05% to 1.0996 dollars, and the pound sterling 0.15% to 1.2712 dollars.
In Asia, the yen strengthened by 0.22% to 147.16 yen per dollar, while the Australian dollar lost 0.18% to 0.6636 dollars.
OIL
Oil is hesitant before the next OPEC meeting, scheduled for Thursday, and as the storm in the Black Sea complicates crude supply chains.
Brent is stable at $81.62 per barrel, with American light crude (West Texas Intermediate, WTI) gaining 0.12% to $76.5.
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