HESITATION IN SIGHT IN EUROPE
PARIS (Archyde.com) – The main European stock markets, initially promised a slight rebound, are now heading for a hesitant opening, as futures on American indices have gone into the red, a few hours before the start of the publication of results.
The “futures” on indices suggest virtual stability for the CAC 40 in Paris and the FTSE 100 in London but a decline of 0.13% for the Dax in Frankfurt and 0.17% for the EuroStoxx 50.
Those of Wall Street, which had started the day on the rise, now foreshadow a decline.
European stocks fell sharply on Wednesday after the announcement of a stronger than expected 9.1% rise in consumer prices in the United States last month, the highest inflation recorded since 1981.
These figures have triggered a new revision of expectations of a rise in US interest rates, with the market now judging that the Federal Reserve could raise the “fed funds” rate by 100 basis points on 27 July. A hypothesis deemed all the more credible as it is the choice made by the Bank of Canada on Wednesday, again in the face of inflation.
On the bond market, the conjunction between the prospect of a sharp rise in rates and the fear of a recession resulted in an accentuation of the inversion of the American yield curves: the gap between the two-year and the ten years has almost reached 25 basis points, not seen since November 2000.
The upcoming session still promises to be lively with the program of new economic forecasts from the European Commission, US producer price figures and the start of earnings publications in the banking sector with JPMorgan Chase and Morgan Stanley.
VALUES TO FOLLOW:
A WALL STREET
The New York Stock Exchange ended slightly lower in a choppy session on Wednesday after the US inflation figures and the revision of the Fed’s rate hike outlook.
The Dow Jones index fell 0.67%, or 208.54 points, to 30,772.79, the Standard & Poor’s 500 lost 17.02 points, or 0.45%, to 3,801.78 and the Nasdaq Composite lost fell 17.15 points (-0.15%) to 11,247.58.
All three finished above their daily lows after making brief forays into positive territory.
On the stock side, Delta Air Lines fell 4.5% after publishing results below expectations, while Twitter took 7.9% following the announcement by the Hindenburg Research fund of a major equity investment.
Index futures suggest an open close to breakeven for now.
IN ASIA
At the Tokyo Stock Exchange, the Nikkei index ended up 0.62%, the fall of the yen, favorable to exporters, having prevailed on the prospect of an economic slowdown.
In China, the Shanghai SSE Composite lost 0.23% and the CSI 300 0.15% with the decline in banking stocks and real estate.
CHANGES
The dollar remains on the rise against the other major currencies, benefiting both from expectations of a rise in US rates and from its status as a safe haven against the risk of recession.
The index, which measures its fluctuations against a benchmark basket, rose 0.46%, very close to the nearly 20-year peak reached on Wednesday.
Against the yen, the greenback hit its highest level since September 1998, rising to 138.58.
The euro dropped 0.45% against the US currency but remained above parity at 1.0015.
RATE
The yield on ten-year US Treasury bills, which ended down almost five basis points on Wednesday, is rising again to 2.9484% but remains well below the two-year, which appears at 3, 2068%.
In Europe, the ten-year German is up slightly in early trading at 1.162%.
OIL
Oil prices, which rose at the start of the day, are now close to equilibrium and that of Brent has fallen back below 100 dollars, the market remaining torn between the prospect of persistent supply tensions and that of a slowdown in demand in the event of a sharp rise in US rates.
Brent gained 0.05% to 99.62 dollars a barrel but US light crude (West Texas Intermediate, WTI) lost 0.11% to 96.19 dollars.
(Writing by Marc Angrand, editing by Kate Entringer)