PARIS (Reuters) – European stock markets finished mixed on Wednesday before the meeting of the Federal Reserve later in the evening, and before those of the Bank of England and the European Central Bank scheduled for Thursday.
In Paris, the CAC 40 lost 0.16% to 7,531.22 points and the German Dax lost 0.15%. The British Footsie for its part increased by 0.08%.
The EuroStoxx 50 index ended the session down 0.15%, against a stable FTSEurofirst 300 and Stoxx 600.
Markets are positioning themselves ahead of the Federal Reserve’s announcement of its next rate decision at 19:00 GMT on Wednesday.
The central bank is expected to keep rates at their current levels, in the range of 5.25%-5.5%, but will also publish its updated economic projections, which will include the anticipated rate path for next year.
Markets will also be attentive to comments from the institution’s president, Jerome Powell, who could emphasize the length of time rates will need to be kept at a restrictive level to bring inflation under control.
Investors are betting on an initial cut of 25 basis points for May, but the disinflationary process seems to be showing signs of running out of steam, which could keep monetary policy easing at bay.
Caution will continue on Thursday, as the Bank of England and the ECB will make their monetary policy decision at 12:00 GMT and 13:15 GMT respectively: whether the two central banks should, like the Fed, maintain their rates at their current levels , the comments that those responsible for monetary policy will make on this occasion could cause the markets to react.
“Financial markets continue to cling to a scenario of rapid relief before the last burst of central bank meetings in 2023,” observes Axel Botte, strategist at Ostrum AM, estimating that “central banks must resume hand”.
VALUES
Renault fell 2.46% after the French car manufacturer announced a capital loss of one billion euros resulting from the sale of part of its stake in Nissan.
EssilorLuxottica finished up 1.01%, leading the CAC 40, after JPMorgan reiterated its recommendation to “overweight” the group.
The Entain betting and gaming group jumped 5.09% after announcing the departure with immediate effect of its managing director, Jette Nygaard-Andersen.
BASF advanced 4.43%, UBS having switched to “purchase” on the German group.
Nel fell 9.25% after the Norwegian hydrogen production company announced that one of its customers had canceled an order, reflecting poor conditions in the sector, according to an analyst.
A WALL STREET
Wall Street appears hesitant at closing time in Europe, with investors being cautious before the Fed’s announcement.
At closing time in Europe, trading on the New York Stock Exchange indicated a stable Dow Jones, compared to an increase of 0.12% for the Standard & Poor’s 500 and 0.12% for the Nasdaq Composite.
RATE
Yields fell in the United States after the publication of a producer price indicator weaker than expected by consensus, showing that the process of disinflation is spreading throughout the American economy.
At the close of the European interest rate markets, the ten-year Treasury yield fell by 5.1 bp to 4.1547%, compared to 6.6 bp for the two-year rate, to 4.6654%.
The yield on the German ten-year fell 6.3 bps to 2.169%, while that of the two-year rate fell by 6.8 bps to 2.654%.
CHANGES
Foreign exchange markets are sluggish ahead of the Fed meeting.
The dollar lost 0.03% against a basket of reference currencies, while the euro lost 0.02% to $1.079.
The pound sterling fell 0.30% to $1.2523, after a surprise contraction in GDP in October.
OIL
Crude prices are rebounding but remain close to their lowest in six months, while OPEC, in its latest monthly report published Wednesday, said it was still confident in market fundamentals and cited “exaggerated concerns” over the status of the request.
Brent gained 1.53% to $74.36 per barrel, American light crude (West Texas Intermediate, WTI) gained 1.52% to $69.65.
TO BE CONTINUED THURSDAY:
(Written by Corentin Chappron, edited by Blandine Hénault)
Copyright © 2023 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
