by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected on a hesitant note on Thursday, with the European Central Bank (ECB) due to make its monetary policy decisions during the day as doubts began to emerge over the timetable and pace of the expected drop in key rates.

According to the first available indications, the Parisian CAC 40 should lose 0.06% at the opening after having finished stable the day before. The Dax in Frankfurt could fall by 0.01%, while the FTSE 100 in London, supported by energy stocks, should gain 0.27%. The EuroStoxx 50 index is expected to rise by 0.02%.

The ECB will publish a monetary policy statement at 12:15 GMT which will be followed half an hour later by a press conference by its president Christine Lagarde.

A new status quo on the cost of money is widely anticipated by market operators, but they hope that the Frankfurt institution will provide details on the future trajectory of rates after opening the door at the previous meeting. , to a drop in borrowing costs this year.

While a consensus was emerging for a rate cut by the main central banks from June, the strength of the American economy combined with the persistence of inflation across the Atlantic are leading some to consider that the Fed could reduce its rate only at the end of the year. They also believe that the ECB will not be able to initiate its monetary easing cycle before the American central bank.

Money markets are currently counting on a 76 point cut in ECB rates this year compared to a reduction of 95 points anticipated at the end of March.

“From a trading perspective, we believe that any confirmation from Lagarde that a June rate cut is underway is likely to lead to increased expectations of full rate cuts in 2024,” Rabobank underlines in a note. .

The publication at 12:30 GMT of a new inflation indicator in the United States, that of producer prices (PPI), after that of consumer prices (CPI), which came out higher than expected, could also influence the trend on the stock market.

“This is the third positive result in a row and means that the story of stalled disinflation can no longer be called an incident,” notes Seema Shah, strategist at Principal Asset Management, referring to the high CPI figures. published Wednesday.

A WALL STREET

The New York Stock Exchange ended sharply lower on Wednesday after the announcement of higher than expected inflation in March in the United States, which limits the prospects of rate cuts this year from the Fed. The Dow Jones index fell 1.09%, or 422.16 points, to 38,461.51 points.

The broader S&P-500 lost 49.27 points, or 0.95%, to 5,160.64 points.

The Nasdaq Composite fell 136.28 points (-0.84%) to 16,170.36 points.

The consumer price index (CPI) in the United States increased by 0.4% last month and by 3.5% year-on-year, in each case growth 0.1 point higher than market expectations. economists. Above all, underlying inflation, which excludes the most volatile elements of energy and food products, and that in services, the main sector of economic activity, were also stronger than expected.

US Treasury yields jumped and the dollar strengthened on the release of the data, which weighed on equity markets.

The “minutes” of the Fed’s last monetary policy meeting last month also testified to doubts among officials of the American central bank about the dynamics of disinflation in the United States.

This prospect of high rates over a prolonged period has particularly weighed on real estate stocks but also on digital giants, growth stocks par excellence, such as Apple (-1.11%) or Microsoft (-0. 71%).

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index fell by 0.35% to 39,442.63 points, the rise in bond yields weighing on the chip sector with in particular Screen Holdings (-2.04%) and Tokyo Electron (- 0.94%). The broader Topix, on the other hand, advanced 0.15% to 2,746.96 points.

The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) lost 0.3%.

In China, the Shanghai SSE Composite fell by 0.17% and the CSI 300 dropped by 0.15% after data showing persistent deflation (-2.8% over one year) of producer prices in China in March. Consumer prices, for their part, increased again in March, by 0.1% year-on-year, after +0.7% in February.

VALUES TO FOLLOW IN EUROPE:

EXCHANGES/RATES

The dollar fell slightly by 0.029%) against a basket of reference currencies. The greenback is, however, still solid after the publication of consumer prices in the United States, which removes the prospect of a rapid rate cut by the Fed.

The euro is gaining -0.05%, to 1.0737 dollars, while the pound sterling is trading at 1.2537 dollars (+0.05%).

The yen weakened -0.05% to 153.09 per dollar after briefly falling to 153.24, the lowest in 34 years, rekindling speculation about an intervention by the Tokyo authorities, who reaffirmed that they were not doing anything. exclude.

The yield on ten-year US Treasury bonds fell by two basis points, to 4.5498%, after a jump of 18 points the day before.

The yield on the German Bund of the same maturity, which gained six basis points on Wednesday, rose again around three points on Thursday, to 2.459%. The two-year one reached a four-month peak at 2.99% in early trading on Thursday before reducing its gains to 2.973%.

OIL

Oil prices, which rose by a dollar on Wednesday, remain high as investors prepare for a worsening crisis in the Middle East, potentially involving Iran, OPEC’s third largest producer.

Brent nibbles 0.04% to $90.44 per barrel and American light crude (West Texas Intermediate, WTI) gains 0.07% to $86.15.

(Written by Claude Chendjou)

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