by Augustin Turpin
(Reuters) – Wall Street is expected to fall on Wednesday and European stock markets are in the red at mid-session, as expectations of future interest rate cuts continue to be tempered by comments from European Central Bank officials , while disappointing Chinese growth figures weigh on the trend.
New York index futures signal Wall Street opening down 0.46% for the Dow Jones, 0.49% for the Standard & Poor’s-500 and 0.6% for the Nasdaq.
In Paris, the CAC 40 fell 1.19% to 7,310.09 points around 11:35 GMT. In Frankfurt, the Dax lost 1.1% and in London, the FTSE 1.75%.
The pan-European FTSEurofirst 300 index lost 1.26%, the Eurozone EuroStoxx 50 1.1% and the Stoxx 600 1.33%.
Speaking on Bloomberg TV on Wednesday on the sidelines of the World Economic Forum in Davos, Switzerland, Christine Lagarde said that while the European Central Bank (ECB) is on track to bring inflation back to the 2% target, it has not yet won its fight for price control.
The head of the Dutch central bank and member of the Governing Council of the ECB, Klaas Knot, estimated that the markets were anticipating monetary easing too markedly.
In line with those of other central bankers this week, these comments continue to undermine the optimistic scenario of an anticipated rate cut.
“Now that the dust is settling, we see that some of the optimism (from last year) was a bit exaggerated. Markets need to readjust (their expectations),” said Anthi Tsouvali, an analyst at State Street Global Markets .
The release of Chinese economic data, which showed that growth is struggling to rebound strongly and sustainably since the emergence of COVID-19, did not improve sentiment.
VALUES IN EUROPE
In terms of values, the luxury giants LVMH, Kering and Richemont, exposed to China, fell by 1.98%, 2.7% and 2.5% respectively.
Renault lost 2.5% despite a 9% growth in its global sales volume after four consecutive years of decline, while Tesla announced a drop in the prices of some of its models in France and Germany.
Worldline fell 0.9% after opening sharply higher in reaction to Reuters information according to which the payments group is examining its options to reassure shareholders and avoid a hostile takeover bid.
RATE
The yield on the 10-year German Bund, the benchmark for the European bond market, reached its highest level in a month on Wednesday, driven by cautious comments from central bankers.
It gained 3.6 basis points to 2.251% and that of the two-year rose by 6.2 bp to 2.652%.
The ten-year US Treasury lost 0.4 basis points to 4.0618%.
CHANGES
The dollar reached its highest level in a month, with the greenback benefiting from its safe-haven status in the face of the impact of Chinese economic data and comments from central bankers.
“The combination of weak Chinese data and a refusal by ECB and Fed officials to carry out early easing weighs on risk sentiment and supports the dollar,” said Chris Turner, an analyst at ING.
The dollar advances (0.04%) against a basket of reference currencies, while the euro is almost stable at 1.0876 dollars.
OIL
Oil is falling, amid concerns for demand due to economic growth in China and a strengthening dollar.
Brent dropped 1.95% to $76.76 per barrel, with American light crude (West Texas Intermediate, WTI) losing 2.17% to $70.83.
(Some data may have a slight lag)
(Written by Augustin Turpin,)
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