PARIS (Reuters) – The main European stock markets are expected to be mixed at the opening on Wednesday, with investors digesting the latest inflation data in the United States and Great Britain.
Futures suggest an opening 0.13% lower for the Paris CAC 40, compared to a 0.35% rise for the FTSE in London, and a directionless Dax in Frankfurt and EuroStoxx 50.
Markets are repositioning themselves after the publication of an indicator of price dynamics that is stronger than expected by economists.
This persistence of inflation is pushing investors to revise downward their forecasts for rate cuts: money markets are now factoring in 90 basis points of easing in 2024, a little less than four rate cuts which would begin in June.
A few weeks earlier, the markets were able to wait for up to seven rate cuts, a 175 bp drop, recall ING strategists.
Investors will also be paying attention to other data points expected this week which will provide more details on the US economic trajectory.
“The publication of a stronger than expected index has definitively ruled out the prospect of a rate cut in March and will probably lead to a new debate on a scenario of “non-landing” of the economy, or even overheating”, notes Joshua Jamner, analyst at ClearBridge Investments.
“The process of disinflation, however, is not a straight line, and a high figure, taken in isolation after a long series of more favorable figures, is not enough to create a new trend.”
Conversely, British inflation was lower than expected in January, which could encourage investors to bet on a rapid fall in rates across the Channel and supports British assets.
A WALL STREET
The New York Stock Exchange ended sharply lower on Tuesday as data on inflation in the United States, higher than expected, dampened the markets’ hopes of seeing the Fed soon make a first cut in interest rates. interest, a situation which benefited bond yields.
The Dow Jones index lost 1.36%, or 522.05 points, to 38,275.33 points. The broader S&P-500 lost 68.14 points, or 1.37%, to 4,953.70 points. The Nasdaq Composite fell 282.64 points (1.79%) to 15,659.91 points.
IN ASIA
The Tokyo Stock Exchange ended down on Wednesday, in the wake of the sharp decline on Wall Street. The Nikkei index lost 0.69% to 37,703.32 points and the broader Topix lost 1.04% to 2,584.82 points.
Investor SoftBank Group lost 3.36% after its holding Arm fell 14%.
Chinese markets are closed this week.
RATE
US yields are consolidating after reaching their highest levels in more than two months on Tuesday, under pressure from inflation data that is more resilient than expected.
The ten-year Treasury yield fell 3.1 bps to 4.2848%, while the two-year rate fell 5.5 bps to 4.6011%.
The German ten-year yield is stable at 2.391%, while that of the two-year rate erodes by 3.5 bp to 2.7364%.
CHANGES
The dollar is giving up some of its gains, with the greenback closing Tuesday at its highest since last November.
The dollar declines 0.09% against a basket of benchmark currencies, while the euro gains 0.02% to $1.0711, and the pound sterling weakens 0.14% to $1.2571 .
In Asia, the yen strengthened by 0.29% to 150.36 yen per dollar, while the Australian dollar gained 0.39% to 0.6477 dollars.
OIL
Crude markets are hesitant as oil stocks rose more than expected last week in the United States according to data from the American Petroleum Institute, while the latest US inflation figures weigh on demand prospects .
Brent eroded by 0.22% to $82.59 per barrel, American light crude (West Texas Intermediate, WTI) was stable at $77.73.
(Written by Corentin Chappron, edited by Kate Entringer)
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