Stop on the horizon for European stocks, doubts about the Fed – 08/12/2022 at 07:58


Major European exchanges are expected to take place without much change

by Laetitia Volga

PARIS (Reuters) – Major European stock markets are expected to remain unchanged at the open on Friday, as investors remain uncertain how aggressively the Federal Reserve will raise interest rates in the United States despite slowing inflation last month. .

The first available indices show a decline of 0.04% for the Parisian CAC 40, 0.07% for the Dax in Frankfurt, 0.02% for the FTSE in London, and 0.05% for the EuroStoxx 50.

Thursday’s release of an unexpected month-over-month decline in the US Producer Price Index confirmed calm on the US inflation front after price numbers were below consumption expectations.

While this initially pleased investors by encouraging hopes of less restrictive monetary tightening than expected from the Federal Reserve, several institution officials cautioned against excessive optimism.

San Francisco Fed President Mary Daly said Thursday that while a half-point rate hike in September “makes sense,” she is open to the prospect of a larger increase in the face of inflation, which is still four times higher than the 2% target.

“The market will recognize that the Fed’s monetary policy committee still has a lot of work to do and that it will have to raise the fed funds rate to 4% by the end of the year,” said Carol Kong of the Commonwealth Bank of Australia. . “I think there is some leeway for the markets to revise their forecasts upwards for the ‘fed funds’ rate.

On Wall Street

The New York Stock Exchange ended Thursday in a mixed order, with the Nasdaq and S&P 500 indexes closing slightly lower on continuing doubts about the pace of the Fed’s monetary tightening.

The Dow Jones increased 0.08% to 33,336.67 points, the Nasdaq Composite Index fell 0.58% to 12,779.91 points, and the S & P-500 lost 0.07% to 4,207.33 points.

The latter reached a three-month peak in the session on the back of producer price data, but Fed officials left no doubt that they intend to tighten monetary policy until inflationary pressures subside.

In terms of values, Disney gained 4.68% after announcing that its video-streaming platforms had outnumbered Netflix subscribers.

Futures are pointing to a slight rise in the session from 0.1% to 0.3%.

In Asia

On the Tokyo Stock Exchange, which was closed Thursday for a holiday, the Nikkei index jumped 2.36% to its highest level since mid-January, in response to slowing inflation in the United States.

The main contributor to the index’s rise, SoftBank shares rose 5.81% after announcing that it would make a gain of $34.1 billion by reducing its stake in Alibaba.

Honda Motor stock rose 3.47% as the automaker raised its full-year operating profit forecast thanks to a weaker yen.

In China, the Shanghai Composite Index SSE and CSI 300 on the Chinese mainland lost 0.14% amid the COVID-19 outbreak.

Health authorities listed more than 2,000 new SARS-CoV-2 infections on Wednesday and Thursday, compared to about 1,000 in the previous days.

Exchange / Prices

The dollar rose slightly against a basket of international currencies (+0.1%) and the euro was stable at 1.032.

In the bond market, the yield on the 10-year Treasury fell slightly to 2.8657% the day after a three-week high of 2.902%, and investors were taking in proportion to the impact of the latest US inflation numbers on the Fed’s intention to continue its monetary tightening. .

oil

Oil prices are falling amid uncertainty over the outlook for demand following divergent forecasts from OPEC and the International Energy Agency.

Brent fell 0.54 percent to $99.06 a barrel, and US light crude (West Texas Intermediate, West Texas Intermediate) fell 0.6 percent to $93.77.

(Writing by Letitia Volga, Editing by Mathieu Brotthard)

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