2023-06-13 12:00:14
(Photo: The Canadian Press)
MARKET REVIEWS. Global stock markets showed confidence on Tuesday ahead of the start of the US Federal Reserve meeting and the release of the US CPI inflation indicator, which investors said could influence the rate decision.
Stock indices at 8:00 a.m.
Global markets were up on Tuesday morning ahead of new US inflation data and the Fed’s key interest rate announcement.
Paris took 0.6% at the start of the session in Europe. London added 0.1% and Frankfurt was up 0.4%.
In New York, before the markets open, the average Dow Jones of industrial stocks rose by 0.1% and the broader index S&P 500 of 0.3%.
In Asia, the Nikkei 225 jumped 1.8% in Tokyo. The scholarship of Shanghai took 0.2% and the Hang Seng 0.6% in Hong Kong. Sydney added 0.2% and Seoul 0,3%.
On the New York Commodity Exchange, the price of oil added 42 cents to US$67.54 a barrel.
The context
The US S&P 500 is heading for a higher open after closing at a 13-month high on Monday. But the trend is likely to change by the open, with the release of US inflation figures. These can “seal the decision” of monetary policy to be made by the Federal Reserve on Wednesday, according to IG analyst Alexandre Baradez.
Investors give a nearly 75% probability of a pause in rate hikes according to the CME Group, a first since March 2022 and 10 meetings. Meanwhile, the main policy rate has risen from just above 0% to over 5%.
For several sessions, the US indices have experienced renewed optimism. “It seems that investors have returned to the basic scenario of a + soft landing +” for the economy, with inflation slowing sufficiently and activity bending without breaking, describe analysts at Muzinich & Co.
In addition to the recent strong growth of the S&P 500, its volatility “fell at the end of last week to its lowest since the beginning of 2020” notes Alexandre Baradez, which is a sign according to him that “equity investors are only very weakly hedged against a possible unpleasant surprise” in terms of inflation.
Optimistic trend also in Japan, where the Nikkei index advanced by 1.8% on Tuesday to exceed the threshold of 33,000 points, a first since July 1990.
The Chinese indices, much less dynamic in 2023, also ended in the green, with +0.60% in Hong Kong and +0.15% in Shanghai.
Investors around the world were satisfied with the decision of the Chinese central bank to surprise analysts to reduce its key short-term interest rate, a measure intended to support activity in a context of faltering post-Covid recovery.
In Europe, after a rising opening, the indices are returning to equilibrium, Paris gained 0.07%, Frankfurt 0.17% while Milan fell by 0.07% and London by 0.03%.
On the bond market, government bond rates remained stable in Europe and the United States, and rose a little in the United Kingdom.
Fuel-efficient driving for Volkswagen
According to the daily Handelsblatt, the supervisory board of Volkswagen (+1.33%) is discussing new objectives for the group today. This would be a vast savings program of more than 3 billion euros for the VW, Skoda and Seat brand group alone.
In the background, the growing competitive pressure on the main market of the group, China. Discussions will also focus on the brands’ new financial targets, which will be announced on June 21 at an investor conference.
Rise in oil prices
Oil prices rose on Tuesday as investors bet that the central bank’s stimulus to the Chinese economy will support demand.
The barrel of North Sea Brent, for August delivery, climbs 1.51% to US$72.93. Its American equivalent, the barrel of West Texas Intermediate (WTI) for July delivery, rose 1.25% to US$6,796.
This trend also benefits mining companies in London: Glencore gagne 3,48%, Rio Tinto 3,24%, BHP 2.24%. On the oil side, BP prend 0,89%, Shell 0,42%.
The euro gained 0.44% against the dollar, to 1.0804 $US for one euro.
The bitcoin takes 0.91% to US$26,130.
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