Traders work at the Frankfurt Stock Exchange
by Claude Chendjou
PARIS (Archyde.com) – Europe’s main stock markets are expected to be down slightly at the open on Thursday following three consecutive sessions in the green, as caution is likely to prevail following the minutes of the Federal Reserve’s latest monetary policy meeting (Fed) and before the publication of several economic indicators in Europe and the United States.
Index futures suggest a decline of 0.34% for the CAC 40 in Paris, 0.23% for the Dax in Frankfurt, 0.18% for the FTSE 100 in London and 0.30% for the EuroStoxx 50.
European stock markets, which benefited on Wednesday from the recovery of the PMI activity indices in the euro zone for the month of December and from the slowdown in inflation in Germany and France, are now waiting to know the evolution of producer prices. in November in the monetary bloc, statistics expected at 10:00 GMT. The Archyde.com consensus forecasts a further monthly decline in November (-0.9%) and a deceleration over one year (+27.5%).
Monthly services indices in Britain and the US are also on the agenda, while the ADP US jobs survey, due at 13:15 GMT, should provide investors with a first look at the labor market. in December in the United States before the official report scheduled for Friday on job creations, wages and the unemployment rate.
Minutes of the Fed’s latest meeting, released on Wednesday, showed members of the US central bank’s monetary policy committee (FOMC) unanimously agreed that the institution should slow the pace of its steep hikes. interest rates so as to reduce risks to the economy.
The “minutes” of this meeting, however, underline the “need to keep flexibility and options” on rates, which suggests that the Fed might return to rate hikes of 25 basis points as soon as its meeting on January 31- February 1, but also retain the possibility of a higher-than-expected rate peak if inflation persists, analysts say.
Fed FOMC members further noted that an “unwarranted easing of financial conditions” would complicate efforts to restore price stability. For Vishnu Varathan, head of economics at Mizuho Bank, it is “a warning to the market, that being too optimistic can ironically backfire”, with the Fed likely to tighten policy further if expectations of a rates ease financial conditions.
A WALL STREET
The New York Stock Exchange ended up on Wednesday, following a jagged session, following the publication of the “minutes” of the Fed.
The Dow Jones Industrial Average gained 0.40%, or 133.40 points, to 33,269.77 points.
The broader S&P-500 gained 28.83 points, or 0.75%, to 3,852.97 points.
The Nasdaq Composite advanced for its part by 71.78 points (0.69%) to 10,458.76 points.
IN ASIA
At the Tokyo Stock Exchange, the Nikkei index ended with a gain of 0.4% to 25,820.8 points, rebounding from a three-month low. The broader Topix slid 0.04% to 1,868.9 points.
In China, the Shanghai SSE Composite climbs 1.01% and the CSI 300 1.94%, despite the Chinese service sector activity statistic showing a contraction in December due to the COVID pandemic -19, the PMI index calculated by Caixin standing at 48.0 once morest 46.7 in November.
The hope of a recovery of the Chinese economy following the abandonment of the “zero COVID” policy continues to prevail in the eyes of investors: “The reopening of China has a significant impact (… ) worldwide,” said Joanne Goh, investment strategist at DBS Bank. The move not only boosts tourism and consumption but may also alleviate some of the supply chain challenges seen in 2022, she said.
RATE
On the bond market, the yield of ten-year Treasuries was almost stable Thursday, at 3.70%, following having lost more than eight basis points the day before following the publication of the “minutes” of the Fed.
The ten-year German Bund yield was also virtually unchanged at 2.28%, following falling regarding ten basis points on Wednesday.
CHANGES
The dollar, down in early trading in Asia, is now stable once morest a basket of benchmark currencies.
The Japanese currency, up 0.21%, trades at 132.34 yen to the dollar, benefiting from speculation that the Bank of Japan (BoJ) will abandon the ultra-accommodative policy this year.
The euro is displayed at 1.0607 dollars (+0.08%).
OIL
Oil prices, supported by an ebbing dollar, rebounded following two consecutive sessions in the red, but concerns over demand limited the gains.
Brent rose 0.96% to 78.59 dollars a barrel and American light crude (West Texas Intermediate, WTI) advanced 1.1% to 73.64 dollars.
(Written by Claude Chendjou, edited by Bertrand Boucey)
