Paris dropped 0.21%, Frankfurt and Milan lost 0.26% and London fell 0.09%. Conversely, Zurich closed up 0.22%.
US stock indices were up on Wednesday, helped by a decline in US short-term interest rates, while European stock markets were more cautious a few hours before the US Federal Reserve’s monetary policy announcements.
European stock markets closed in the red: Paris lost 0.21%, Frankfurt and Milan lost 0.26% and London fell 0.09%. In Zurich, the SMI gained 0.22%.
In New York, around 4:50 p.m. GMT, the Dow Jones advanced by 0.61%, the S&P 500 by 0.60% and the Nasdaq by 0.63%. The two-year US debt rate, very sensitive to monetary policy, fell to 4.17% once morest 4.22% on Tuesday.
At the same time, ten-year European government debt rates increased slightly.
All the attention of investors will turn to the American central bank, the Fed, at 7:00 p.m. GMT, to discover the announcements of the institution and listen to its president Jerome Powell.
While US inflation slowed more than expected in November over one year, to 7.1% once morest 7.7% in October, investors consider that the Fed will start to reduce the rise in its rates.
They anticipate on Wednesday, following its last meeting of the year, a 50 basis point hike following four straight hikes of 75 basis points.
It is especially the evolution of rates next year that remains an uncertainty for investors.
“The markets anticipate that the Fed rates will peak at 4.8% and remain at this level until the summer of 2023, before starting to fall, to 4.3% in December 2023”, notes Bénédicte Kukla, senior investment analyst at Indosuez Wealth Management.
But according to her, “if we do not see underlying inflation falling significantly in mid-2023, there is no reason for the Fed to lower its rates”.
CMC Markets analyst Michael Hewson therefore fears that Jerome “Powell is making a harsh statement” to counter those expectations and “reset market optimism”.
Thursday, it will be the turn of the Bank of England and the European Central Bank to decide.
The evolution of monetary policies is all the more worrying for investors who fear that high interest rates will push the global economy into recession.
On the side of currencies, oil and bitcoin
Oil prices surged, driven by uncertainty over the impact of a leaking pipeline between Canada and the United States and a surprise surge in US crude reserves.
Around 4:50 p.m. GMT, a barrel of Brent from the North Sea for delivery in February gained 2.35%, to 82.57 dollars.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in January, took 2.36%, to 77.20 dollars.
The dollar was trading near its lowest since June once morest the euro on Wednesday, awaiting the Fed’s monetary policy decision. Around 4:45 p.m. GMT, the greenback lost 0.25% to 1.0659 dollars for one euro.
Bitcoin rose 2% to $18,115, returning to a level not seen in more than a month.
Positive outlook in tourism
Shares in world tourism leader TUI fell 8.03% in London. The group almost divided its net loss by ten last year thanks to the resumption of travel and wants to consolidate in 2023 the positive return of its operating profit.
The German airline group Lufthansa (+ 1.29%) is still interested in a takeover of the Italian public company ITA Airway, despite the abandonment of the Swiss partner MSC, with which it had made a joint offer in January, said its CEO. Wednesday, in an interview with the German daily “Die Zeit”.
In New York, the airline Delta Airlines gained 3.36% following announcing that its turnover in 2023 might increase by 15% or 20% signaling “robust demand” for travel.