Cautious opening outlook in Europe pending central banks – 09/19/2022 at 08:40


View of the Palais Brogniard, formerly the Paris Stock Exchange, in Paris.

PARIS (Reuters) – Major European stock markets are expected to decline slightly on Monday, with hopes of a continuation of Wall Street’s decline appearing to dampen any sign of a rebound ahead of meetings in some of the main central banks on the planet, the United States Federal Reserve in your mind.

Index futures, which rose at the start of the day, now suggest a decline of 0.28% for the CAC 40 in Paris, 0.17% for the Dax in Frankfurt and 0.17% for the Euro Stoxx 50.

UK markets will remain closed as the day is a public holiday in the UK on the occasion of Queen Elizabeth II’s funeral.

The broad European Stoxx 600 index lost 2.89% last week, its worst weekly performance since mid-June, and the Paris market fell 2.17% on fears of rising interest rates. .

The Fed is expected to announce a sharp rate hike on Wednesday in an attempt to curb inflation, which still shows no signs of a lasting slowdown. The market is now pricing in an 81% probability of a three-quarter point hike in the fed funds rate on Wednesday, compared to 19% for a 100 basis point tightening, according to FedWatch barometer.

After the decision of the American central bank, the markets will follow the meetings of the Japanese, Swiss and British central banks on Thursday.

The Bank of Japan is expected to leave its monetary policy unchanged while economists and analysts polled by Reuters expect a rate hike of 75 basis points for the Swiss National Bank and the Bank of England.

However, this simultaneous tightening occurred in a context of worsening economic conditions, which increased the nervousness of investors.

They will also learn on Friday the first results of the S&P Global PMI surveys on the evolution of industrial activity and services since the beginning of the month.

ON WALL STREET

The New York Stock Exchange ended lower on Friday, as FedEx’s cancellation of its annual financial forecast cooled the enthusiasm of investors already worried about the pace of rate hikes by the Federal Reserve.

The Dow Jones index fell 0.45%, or 139.4 points, to 30,822.42, the Standard & Poor’s 500 lost 28.02 points, or 0.72%, to 3,873.33 and the Nasdaq Composite fell 103.95 points (-0.495%)

The three thus returned to levels they had not seen since mid-July.

FedEx, fell 21.40% after it canceled its annual financial forecast on Thursday, explaining that the results of the first quarter of its staggered financial year suffered from weakness in activity volumes. of this, which worsened at the end of the year. At its start, rivals UPS and XPO Logistics fell 4.48% and 4.67% respectively.

During the week, the Dow Jones lost 4.14%, the S&P 500 4.77% and the Nasdaq 5.48%.

Futures so far suggest an opening of around 0.2% for the Dow Jones, 0.4% for the S&P 500 and 0.7% for the Nasdaq.

IN ASIA

Financial markets remain closed in Japan on a holiday dedicated to honoring the elderly.

In China, the Shanghai SSE Composite lost 0.57% and the CSI 300 0.31%, while in Hong Kong, the Hang Seng lost 1.33%, weakened by the decline on Wall Street and the US President’s comments that Joe Biden on US support for Taiwan in the event of a Chinese invasion.

CHANGES

The dollar, which fell at the beginning of the day, rose again against other major currencies (+ 0.26%). It was trading about 0.8% below the 20-plus-year high reached on September 7.

The euro fell 0.41% to 0.9974.

RATE

US Treasuries yields ended lower on Friday, at 3.438% for the 10-year and 3.848% for the two-year, as the economic slowdown indicated by FedEx’s warning was seen as likely to help the slower stock prices, thereby making the Fed’s job easier.

In the European market, the German 10-year was almost unchanged in early trading at 1.763%.

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The oil market is hesitant, torn between fears of a deterioration in demand and the announcement of the easing of health restrictions in Chengdu, China, which could support it in the short term.

Brent fell 0.09% to 91.27 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.27% to 84.88 dollars.

(Written by Marc Angrand)

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