Caution prevails before US inflation – 07-2022 13:25


Wall Street is expected to rebound slightly, as European stock exchanges begin the mid-session

by Claude Shingo

PARIS (Reuters) – Wall Street is expected to rebound slightly on Wednesday, while European stock markets, which closed the previous day in positive territory, began to fall again mid-session, in a general context of caution in stock markets. Before publishing monthly figures for US consumer prices.

New York index futures point to Wall Street opening 0.16% higher for the Dow Jones and Standard & Poor’s 500, while the Nasdaq could rebound 0.27%.

In Paris, the CAC 40 was down 0.67% at 6003.45 around 11:00 GMT. In Frankfurt, the Dax lost 0.9% and in London the FTSE lost 0.74%.

The European FTSEurofirst 300 Index is down 0.74%, the EuroStoxx 50 Index in the Eurozone is down 0.85%, and the Stoxx 600 Index is down 0.76%.

The US Consumer Price Index (CPI) for June, which will be published at 12:30 GMT, is expected to rise 1.1% in one month and 8.8% on pace. The consensus, which would form a new 40-year high, setting the stage for a potential acceleration in interest rate hikes with the risk of plunging the economy into recession.

“If this (high inflation number) happens today, it could make the bond market a little nervous again, invert the US yield curve more (between the two and ten years) and quickly accelerate the euro toward parity,” predicts Kit Juckes, economist at Societe Generale.

Markets are expecting a 75 basis point rise in the cost of credit after the Fed’s monetary policy meeting on July 26-27, which will be the third straight hike.

The International Monetary Fund (IMF) also revised its forecast for US economic growth to 2.3% this year and just 1.0% next year.

In other economic indicators for the day, June inflation was confirmed at 8.2% y/y in Germany and 6.5% y/y in France.

The stronger-than-expected rise in industrial production in the eurozone in May and Chinese foreign trade statistics, which came in better than expected in the first half, with exports growing by 13.2% year-on-year and a 48% increase in imports, however, somewhat reassured investors. What.

Wall Street values ​​to be followed

values ​​in Europe

On the pan-European Stoxx 600 Index, insurance (-1.34%), auto (-1.50%) and healthcare (-1.27%) showed the largest sectoral declines, while real estate (+0.74%) posted the best performers thanks to buying deals.

Renault, Stelantis and Volkswagen fell 1.24%, 1.56% and 0.67%, respectively, AXA and Munich Re shares fell 2.02% and 1.08%, while Sanofi lost 1.78%.

The Finnish pharmaceutical group Orion, which rose by 6.62%, was supported by the announcement of a cooperation agreement with the American company Merck.

The EDF measure, which closed on Tuesday at €10.225, was suspended on Wednesday following a request from the energy company for the purpose pending government announcements on the group’s renationalization project.

modified

The reversal in the two-year and 10-year US Treasury yields, an anomaly seen as a harbinger of increased recession risks over the two-year horizon, continues on Wednesday, showing the former at 3.0347% and the latter at 2.9539%.

In Europe, the yield on German 10-year bonds rose slightly at 1.1550% after two days of sharp declines. The French equivalent of the same maturity is shown at 1.6670%, up 1.6 basis points.

the changes

The euro, which came close to parity with the dollar on Tuesday at 1.00005, is trading at 1.0056 (+0.2%) on Wednesday, but it could weaken if the rise in US consumer prices accelerates.

The European single currency has lost nearly 12% since the start of the year and is at a 20-year low against the dollar.

For its part, the dollar was almost flat (-0.11%) against a basket of reference currencies after its recent records.

oil

Oil prices are heading higher but the recovery is limited, with the International Energy Agency said on Wednesday that the global crude market is “walking a tightrope” between supply scarcity and the possibility of a recession, with rising prices and deteriorating economic conditions already affecting demand.

Brent rebounded 0.66 percent to $100.15 a barrel and US light crude (West Texas Intermediate, West Texas Intermediate) 0.76 percent to $96.57, after losing 7.1 percent and 7.9 percent, respectively, on Tuesday.

(by Claude Chengo, Editing by Jean-Stefan Bruce)

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