CAUTIOUS RISE IN VIEW IN EUROPE, POWELL TEMPERS ENTHUSIASM
PARIS (Archyde.com) – The main European stock markets are expected to rise slightly on Wednesday, even if caution seems to be gradually regaining the upper hand after the relief caused the day before by the improvement in the health situation in China and the apparent good health of the American economy.
Futures contracts on indices suggest an increase of 0.27% for the CAC 40 in Paris, 0.12% for the Dax in Frankfurt, 0.06% for the FTSE 100 in London and 0.13% for the EuroStoxx 50.
The Paris market gained 1.3% on Tuesday and the broad European Stoxx 600 index 1.22%, its third consecutive rise, after the announcement of the gradual lifting of health restrictions in Shanghai and the well-received figures for retail sales. in the USA.
These two factors favored a renewed interest in risky assets, leading to a marked rise in equities and a decline in the dollar.
But this movement remains fragile, in particular because of the persistent concerns linked to the rise in prices and the rapid rise in the interest rates of the major central banks.
“After last week’s plunge, equities may see a short-term rebound,” said Shane Oliver, chief economist and head of investment strategy at AMP Capital. “But the risks around inflation, monetary tightening, the war in Ukraine and Chinese growth remain high and still point to a further decline in equity markets.”
On Tuesday, US Federal Reserve Chairman Jerome Powell indirectly called investors to order by declaring that the central bank would raise rates as high as necessary to curb inflation even if this meant slowing down growth.
Inflation is also on the agenda today in Europe; in the United Kingdom, it stands at 9% over one year in April, the highest figure since the start of the statistical series in 1989, and we expect at 09:00 GMT the final figures for the evolution of prices in the euro zone last month.
In Asia, the Japanese economy contracted a little less than expected in the first quarter, gross domestic product (GDP) falling by 0.2% while the Archyde.com consensus was expecting -0.4%.
IN WALL STREET
The New York Stock Exchange ended sharply higher on Tuesday, driven by high-growth stocks like Apple (+2.54%) and Tesla (+5.14%), with monthly retail sales figures in the United States having allayed concerns about slowing economic growth.
The Dow Jones index gained 1.34% to 32,654.59 points, the Standard & Poor’s 500 gained 2.02% to 4,088.85 and the Nasdaq Composite rose 2.76% to 11,984.52.
Ten of the eleven major sectors of the S&P-500 rose, led by finance and high technology, up more than 2%.
Index futures, which were up slightly at the start of the day, now suggest a slightly lower open.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index ended up 0.94% and at its highest since May 6, driven by major technology stocks such as Tokyo Electron (+ 2.86%) in the wake of the American Nasdaq .
In China, the Shanghai SSE Composite climbed 0.26% and the CSI 300 0.15% after spending most of the session in negative territory, with some investors questioning the authorities’ ability to achieve their economic objectives.
Morgan Stanley is now counting on growth limited to 5.2% this year while Beijing is aiming for 5.5%, explaining that the impact of the “zero COVID” strategy is only partly offset by the measures of RELAUNCH.
CHANGES
The dollar is stabilizing after falling to its lowest level in two weeks against the other major currencies (+0.01) while the euro (-0.13%) gives some ground after a jump of 1.1 % on Tuesday, its biggest single-session percentage rise since March.
The single European currency is trading at 1.0533 dollars after a peak at 1.0563.
The pound rose to $1.2501 after rising 1.4% on Tuesday, its best session since the end of 2020, before returning to 1.2471 after the inflation figures.
RATE
On the bond market, the yield on ten-year Treasury bills, at 2.986%, remains at its closing levels on Tuesday after statements by Jerome Powell. These boosted the two-year yield, the most sensitive to interest rate expectations, which took up 14 basis points during the session.
In Europe, the German 10-year is virtually unchanged in early trade at 1.059%.
OIL
Oil prices, which had ended down around 2% on Tuesday, started to rise again thanks to hopes of a recovery in Chinese demand with the gradual lifting of health restrictions.
Brent gained 0.65% to 112.66 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.09% to 113.62 dollars.
(Written by Marc Angrand, with Tom Westbrook in Singapore, edited by Matthieu Protard)