by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected to fall again on Thursday, with equity markets likely to continue to suffer from tensions in the bond sector against a backdrop of uncertainty over the pace of rate cuts by the major central banks .

According to the first available indications, the Parisian CAC 40 should lose 0.43% at the opening. The Dax in Frankfurt could fall 0.45%, while the FTSE 100 in London is expected to drop 0.46%. The EuroStoxx 50 index is expected to fall by 0.40%.

The correction in the stock markets could continue at least until the publication on Friday of monthly inflation indicators in the euro zone and the United States, while long-term bond yields on both sides of the Atlantic are at peaks of around a month.

“It’s a bit of a psychological shock for market participants who have not seen yields increase like this until now,” underlines Hiroshi Namioka, chief strategist at T&D Asset Management.

The persistence of inflation and restrictive comments from central bankers are now pushing traders to temper their rate cut forecasts.

“It will be a tough battle to bring inflation back to the 2% target,” notes Dylan Kremer, investment director at Certuity.

If a reduction in borrowing costs in the euro zone seems certain for the month of June, the vagueness remains beyond this deadline, while in the United States the hope of monetary easing in September recedes into the future. to the point that some economists are starting to count on no easing this year from the Fed.

In addition to concerns about the trajectory of rates, the evolution of the economy is also attracting attention. The second estimate of the gross domestic product (GDP) of the United States will be published this Thursday at 12:30 GMT. The day before, the Beige Book of the American Federal Reserve (Fed), which serves as a working basis for its monetary policy committee, showed that economic activity in the country had continued to grow between early April and mid-May but that businesses had become more pessimistic about the future.

A WALL STREET

The New York Stock Exchange ended in decline on Wednesday with concerns about the expected pace of monetary easing from the Fed.

The Dow Jones index fell 1.1%, or 411.32 points, to 38,441.54 points.

The broader S&P-500 lost 39.09 points, or 0.7%, to 5,266.95 points.

The Nasdaq Composite fell 99.3 points (-0.6%) to 16,920.58 points.

The yield on ten-year Treasuries reached a four-week peak on Wednesday, at 4.6%.

“We continue to see this rise in bond yields, which puts pressure on stocks,” said James Abate, fund manager at Center American Select Equity.

In terms of values, ConocoPhillips fell 3.08% after the announcement of the acquisition of Marathon Oil, while airlines suffered in the wake of American Airlines (-13.5%), which reduced its profit forecast for the current quarter.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index fell by 1.28% to 38,064.28 points, after hitting a one-month low during the session in the wake of Wall Street. The broader Topix lost 0.55% to 2,726.55 points.

Japanese stocks linked to “tech” such as Advantest (-6.43%), SoftBank Group (-2.58%) and Tokyo Electron (-2.29%) are in the red.

The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) lost 0.5%.

In China, the Shanghai SSE Composite fell by 0.25% and the CSI 300 lost 0.28%, notably with a fall in the real estate sub-index (-2.96%).

EXCHANGES/RATES

The dollar rose 0.01% against a basket of benchmark currencies, after reaching a two-week high.

The euro fell 0.06% to $1.0793, while the pound sterling traded at $1.2691 (-0.13%).

The yield on ten-year US Treasury bonds fell slightly, by around 1.5 basis points, to 4.6097%, but remained at a high level, close to its peak since May 1.

OIL

The oil market is taking a break while awaiting data from the American Petroleum Institute on American crude stocks last week: Brent fell by 0.20% to 83.43 dollars per barrel and American light crude (West Texas Intermediate , WTI) by 0.16% to $79.10.

(Written by Claude Chendjou, edited by Jean-Stéphane Brosse)

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