PARIS (Reuters) – The main European stock markets are expected to fall at the opening, fears that global inflation will prove more sustainable than expected and constrain the action of central banks eroding risk appetite.

Futures contracts suggest an opening down 0.47% for the Parisian CAC 40, compared to 0.01% for the FTSE in London, 0.64% for the Dax in Frankfurt, and 0.63% for the EuroStoxx 50.

The Federal Reserve, the European Central Bank and the Bank of England have all adopted a more restrictive posture than the markets hoped, forced to revise downwards their expectations of rate cuts in the coming quarters.

Observers’ projections will be put to the test during the session, with US PCE inflation for November due at 1:30 p.m. GMT.

While BofA strategists anticipate growth in the underlying inflation indicator of 0.1% month-on-month, compared to 0.3% in October, the bank recognizes that “progress in disinflation has stalled, and upside risks remain for price dynamics.

A better than expected indicator would keep further rate cuts at bay.

Adding to the uncertainties, the American administration could be struck by partial paralysis as early as Saturday, with American parliamentarians having until midnight Friday to agree on a budget text.

A WALL STREET

The New York Stock Exchange ended in mixed order on Thursday, with less significant movements than the day before, the Dow Jones recording a slight increase after the losses suffered on Wednesday following the Fed meeting, which anticipates limited monetary easing and persistent inflation in 2025.

The Dow Jones index gained 0.04%, or 15.37 points, to 42,342.24 points.

The broader S&P-500 lost 5.08 points, or 0.09%, to 5,867.08 points.

The Nasdaq Composite fell 19.92 points (0.10%) to 19,372.77 points.

IN ASIA

The Tokyo Stock Exchange ended lower in a context of risk aversion, with investors digesting the latest central bank decisions which suggest that inflationary pressures persist. The Nikkei index lost 0.29% to 38,701.90 points. The broader Topix lost 0.44% to 2,701.99 points.

Automotive groups finished higher, supported by the weak yen which favors exporters. Toyota notably gained 1.7%.

Chinese indices are falling after the Chinese central bank left its rates unchanged on Friday. The Hong Kong Hang Seng index increased by 0.08%, the Shanghai SSE Composite fell by 0.06%, the CSI 300 by 0.45%.

RATE

The yield on Treasuries varies shortly after having rebounded significantly, with the 10-year reaching its highest level since May.

The yield on the ten-year Treasury declined by 2.2 bps to 4.5483%, while the yield on the two-year security fell by 2.1 bps to 4.2975%.

The German ten-year yield is stable at 2.306%, that of the two-year rate loses -2 bp to 2.037%.

CHANGES

The dollar remains at its highest since October 2022, with investors positioning themselves for a more restrictive Fed.

The dollar fell by 0.14% against a basket of reference currencies, the euro rose by 0.14% to $1.0376, and the pound sterling strengthened by 0.05% to $1.2505.

In Asia, the yen advanced 0.39% to 156.81 yen per dollar, the Australian dollar rose 0.05% to 0.6239 dollars.

OIL

The strong dollar and the uncertainties weighing on the trajectory of global crude demand are pushing down the barrel.

Brent fell 0.54% to $72.49 per barrel, American light crude (West Texas Intermediate, WTI) weakened 0.5% to $69.03.

(Written by Corentin Chappron)

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