by Augustin Turpin
PARIS (Reuters) – The main European stock markets are expected to rise significantly at the opening on Thursday, after a positive session across the Atlantic the day before, investors having been reassured by announcements from the American Federal Reserve (Fed) on the pace of interest rate cuts to come, after the institution left its borrowing costs unchanged as expected following its monetary policy meeting.
According to the first available indications, the Parisian CAC 40 could gain 0.97% at opening.
Futures contracts report an increase of 1.02% for the Dax in Frankfurt, 0.89% for the FTSE in London and 0.96% for the Stoxx 600.
Wall Street, which has reached peaks since the start of the year under the influence of the craze for artificial intelligence and in the prospect of a shift in the Fed’s monetary policy, had tensed up earlier this month with data showing continued inflation.
The Fed, while deciding to maintain its key rates for the fifth consecutive time, indicated that it still planned to reduce them by three-quarters of a percentage point this year, despite more modest forecasts on the fall in inflation.
Jerome Powell, president of the institution, however indicated that recent data did not strengthen the Fed’s confidence to the point of saying that the battle against inflation was won.
Attention is now focused on the publication of S&P Global PMI index data for France, Germany, Great Britain and the euro zone, likely to liven up trading on Thursday.
A WALL STREET
The New York Stock Exchange, in the green since the start of the session, consolidated its gains with the publication of the Fed press release and ended up on Wednesday.
The Dow Jones index gained 1.03% to 39,512.13 points. The S&P-500 gained 0.89%, to 5,224.62 points. The Nasdaq Composite advanced 1.25% to 16,369.41 points.
While noting in his press release that inflation remained “high” and also revising upwards his growth forecast for the year, Jerome Powell made reassuring comments.
He “didn’t try to dismiss any data but kind of gave the market a reason to ignore the data,” noted Alex Coffey, an analyst at TD Ameritrade.
Nine of the eleven major sectors of the S&P-500 ended the session in the green, including five having gained at least 1%. Conversely, health was the least performing sector, down 0.23%, notably under the effect of the decline of BioNTech after the publication of gloomy annual results. Moderna and Novavax have also declined.
Amazon’s stock ended the day up 1.3%, while Tesla gained 2.5% after confirming the price increase for its Model Y in China.
IN ASIA
The Tokyo Stock Exchange ended up on Thursday, in the wake of Wall Street, with the Nikkei index gaining 2.03% to 40,815.66 points and the broader Topix, 1.61% to 2,795.35 points.
In China, the Shanghai Stock Exchange Composite Index is virtually stable (-0.06%), as is the large-cap CSI 300 (-0.05%).
RATES/EXCHANGES
The yield on ten-year Treasuries stabilized at 4.2729% after its decline the day before following the Fed meeting.
For its part, the dollar lost 0.57% against a basket of reference currencies.
The main lesson for the markets is that the Fed still expects three rate cuts in 2024, underlines Gennadiy Goldberg, head of US rates strategy at TD Securities. Market participants had speculated recently that the Fed would reduce its projections to two cuts this year, given the strength of the economy and the resilience of inflation.
The euro gained 0.16% to 1.0936 dollars.
OIL
Oil prices are rising again, supported by the reduction in crude oil and gasoline stocks in the United States.
“It appears the bullish mantra is still intact, with another unexpected decline in U.S. crude oil inventories last week, as market participants continue to assess the risks of further supply disruption on the Russia-Ukraine front,” observes Yeap Jun Rong, analyst at IG.
The barrel of Brent rose 0.63% to $86.43 and that of American light crude (WTI) gained 0.59% to $81.59.
(Written by Augustin Turpin, edited by Blandne Hénault)
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