THE EUROPEAN SCHOLARSHIPS EXPECTED TO BE A SIGNIFICANT FALL
by Laetitia Volga
PARIS (Archyde.com) – Major European stock markets are expected to drop sharply on Thursday to open in the wake of Wall Street the day before, following minutes from the Federal Reserve’s latest monetary policy meeting indicating that the central bank may start raising rates earlier than expected.
According to the first available indications, the Parisian CAC 40 might lose 1.74% at the opening, the Dax in Frankfurt would fall by 1.66%, the FTSE in London by 1.48% and the EuroStoxx 50 by 1 , 95%.
In the “minutes” of the December meeting released on Wednesday, the Fed said it might have to hike rates earlier than previously considered and start reducing its balance sheet given a “very strong job market. tense “and the high level of inflation.
“Some participants noted that it might be appropriate to start shrinking the size of the Federal Reserve’s balance sheet relatively soon following starting to raise the federal funds rate,” the report wrote. central bank.
The institution announced on December 15 that it would end its bond purchases on the markets in March and paved the way for three rate hikes by the end of 2022.
“What seems to have scared the markets are the discussions regarding reducing the balance sheet (…) raising concerns regarding the tightening of liquidity conditions,” said Michael Hewson at CMC Markets.
“Talking regarding a policy change remains far from its implementation. It would be surprising if the Fed started shrinking the size of its balance sheet so soon following its bond buying program ended. This would suggest a certain degree of panic as inflationary pressures begin to show early signs of abating, “the analyst continued in a note.
A WALL STREET
After the publication of the Fed “minutes” considered more “hawkish” than expected, the S&P 500 and the Nasdaq quickly accentuated their decline while the Dow Jones turned lower.
The latter, which had reached a new record in session, finally gave up 1.07% to 36,407.11 points. The S & P-500 lost 1.94% to 4,700.58 points, its biggest daily decline since November 26, and the Nasdaq Composite was down 3.34% to 15,100.17 points, its worst performance since February.
Futures are currently showing an opening down 0.3% to 0.5%.
IN ASIA
The Nikkei index in Tokyo fell 2.88% as investors shied away from growth stocks at stretched valuations following the report of the last US Federal Reserve meeting.
The downtrend also at work in China is moderated by the announcement of an acceleration of growth in the service sector
The CSI300 index fell 0.99% and the Shanghai Composite SSEC index lost 0.21%.
RATE
The more restrictive tone of the US central bank is pushing Treasury yields to new highs. The ten-year one still takes nearly three basis points to 1.7317%, the highest since last April, and the two-year gain 3.4 points to 0.8636%, evolving to its highest level since March 2020.
“After procrastinating for months on whether to start phasing out bond purchases in the markets, the Fed quickly changed its theme to faster tapering and more and faster rate hikes “said Philip Marey at Rabobank.
CHANGES
On the foreign exchange market, the dollar advances very slightly once morest a basket of benchmark currencies and the euro trades around $ 1.13.
OIL
Oil prices are down following the US Energy Information Agency (EIA) announced an increase in gasoline inventories of more than 10 million barrels in the United States last week, the biggest weekly increase since April 2020, when the Archyde.com consensus forecast an increase of 1.8 million barrels.
“Demand has collapsed, suggesting travel cautiousness following the surge of the Omicron variant. These fears are likely to linger for a few more weeks,” said Caroline Bain, chief economist in commodities at Capital Economics
The barrel of Brent lost 0.94% to 80.04 dollars and US light crude 0.95% to 77.11 dollars.
(edited by Blandine Hénault)
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