Caution is gradually setting in before the Fed – 09/15/2022 at 18:42

File photo of London Stock Exchange Group offices

PARIS (Archyde.com) – The main European stock markets, with the exception of London, ended lower on Thursday and Wall Street gave ground at mid-session, the drop in oil adding to the caution in the approach of the meeting of the Federal Reserve.

In Paris, the CAC 40 lost 1.04% (64.57 points) to 6,157.84 points and in Frankfurt, the Dax dropped 0.55% while in London, the FTSE 100 gained 0.07%.

The EuroStoxx 50 index lost 0.72%, the FTSEurofirst 300 0.58% and the Stoxx 600 0.65%.

At the time of the close in Europe, Wall Street was trading in the red after a hesitant start to the session: the Dow Jones fell by 0.18%, the Standard & Poor’s 500 by 0.62% and the Nasdaq Composite by 0.94%. .

After the turbulence of the last few days, mainly linked to the persistence of inflation in the United States, investors who hoped to find new inspiration in the rain of American indicators of the day remained unsatisfied because they were unable to draw any conclusions. trenches.

Jobless claims fell last week and retail sales rose an unexpected 0.3% in August. Moreover, the “Empire State” activity index fell less than expected for September while the “Philly Fed” posted an unexpected drop.

Finally, industrial production fell by 0.2% in August but manufacturing production increased by 0.1%.

The good health of the job market therefore seems to be supporting consumption for the time being, but corporate order books are showing signs of slowing down. All against a background of rising interest rates, which remains the markets’ No. 1 concern.

Six days before the Fed’s decisions, the preferred scenario remains that of a three-quarters point hike in the “fed funds” rate, but the estimated probability of a 100 basis point hike remains above 20% according to the FedWatch real-time barometer.

This prospect continues to fuel the downward revision of economic forecasts: Barclays now expects a contraction in advanced economies in the fourth quarter and global growth limited to 2.2% in 2023.

OIL

The price of a barrel fell by nearly 4%, the lowest in a week, in reaction to the announcement of an agreement between employers and unions in the rail transport sector in the United States, which should make it possible to avoid a strike on a large scale from Saturday and therefore major logistical disruptions.

Brent fell 3.53% to 90.78 dollars a barrel and US light crude (West Texas Intermediate, WTI) 3.74% to 85.17 dollars.

VALUES

In Europe, the largest sectoral drop of the day is for the energy compartment, whose Stoxx index lost 2.1%. In Paris, TotalEnergies dropped 2.4% and Vallourec 6.57%.

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The high-tech compartment also suffered, in the wake of the Nasdaq, and posted a closing decline of 1.78%.

On the rise, the banking sector benefited from the rise in Spanish stocks after government declarations on a possible modification of the project for the exceptional taxation of bank profits. Santander gained 3.52%, Sabadell 4.9% and BBVA 2.23%.

The Stoxx index of eurozone banks took advantage of this to reach its highest level since June 10.

In M&A news, Vodafone gained 1.98% after a news report that funds KKR and Global Infrastructure Partners were among contenders for entry into the round of its tower subsidiary Vantage Towers (+ 11.39%).

CHANGES

The dollar is hesitant against other major currencies (+0.00%), not far from its recent highs.

The euro regained 0.1% against the greenback but remained below parity, at 0.9987. Against the Swiss franc, the single currency fell to its lowest level since January 2015.

The yen fell again after its rebound on Wednesday, due to a lack of new information on possible interventions from Tokyo to support it.

The yuan has sunk for the first time since July 2020 the threshold of seven for one dollar on the “offshore” market.

RATE

Bond yields are up in the United States as in Europe after the American indicators of the day, for lack of elements likely to call into question the continuation of rate hikes.

The American two-year thus reached 3.879%, its highest level since 2007, before returning to 3.8604%, against 3.4548% for the ten-year.

In the eurozone, the ten-year German rose five basis points to 1.75% and the two-year hit an 11-year high of 1.539%.

The session was marked by a brief inversion of the 10yr-30yr segment of the German yield curve, reflecting the growing concern for the health of the European economy.

(Written by Marc Angrand)

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