SLIGHT RISE IN VIEW IN EUROPE AFTER THE FED
by Laetitia Volga
PARIS (Archyde.com) – The main European stock markets are expected to rise on Thursday at the opening, in the wake of Wall Street the day before, following the announcements of monetary policy from the American central bank.
The first indications available indicate a gain of 0.5% for the Parisian CAC 40, 0.35% for the Dax in Frankfurt, 0.03% for the FTSE in London and 0.42% for the EuroStoxx 50 .
The Federal Reserve (Fed) on Wednesday raised its main interest rate by three-quarters of a point in an attempt to regain control of inflation, while saying it expected a slowing economy and a rise in unemployment in the next months.
A rise of this magnitude had not happened since 1994 but it was widely anticipated by the markets following the consumer price data released last Friday.
The institution’s chairman, Jerome Powell, added that the monetary policy committee would “most likely” have to choose between a half-point or three-quarters point hike at the July meeting, while stressing that he didn’t expect 75 basis point hikes to become “business as usual”.
“The Fed is pretty clear that it’s trying to prepare for a soft landing and the market buys into the idea that early and aggressive action on its part will give it some flexibility later this year and early 2023.” said Tom Garretson, strategist at RBC Wealth Management.
News from the monetary banks will once once more animate the markets with the announcements of the Swiss National Bank and those of the Bank of England.
VALUES TO FOLLOW:
A WALL STREET
After five consecutive days of decline, the New York Stock Exchange ended up on Wednesday following a seesaw session, marked by a rate hike from the Fed in line with market expectations.
The Dow Jones Index gained 1.00%, or 303.70 points, to 30,668.53 points, the S&P-500 gained 54.51 points, or 1.46%, to 3,789.99 points and the Nasdaq Composite advanced 270.81 points (+2.50%) to 11,099.16 points.
On the stock side, Boeing jumped 9.46% following China Southern Airlines carried out test flights with a 737 MAX for the first time since March, suggesting a return to service of this aircraft in China while the request leaves.
Futures are signaling an open close to breakeven for now.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei resumed 0.83% in the wake of Wall Street following falling the day before to its lowest level in a month.
In China, the Shanghai SSE Composite index gained 0.15% and the CSI 300 0.26%.
EXCHANGES/RATES
The index measuring the fluctuations of the dollar once morest a basket of reference currencies lost 0.16% following the Fed’s announcements.
The euro is stabilizing around 1.044 dollars. The single currency trimmed gains to 0.28% on Wednesday following the European Central Bank announced new measures aimed at easing tensions in bond markets.
“The surprise ECB meeting provided very little additional information compared to last week,” said Simon Harvey at Monex Europe. “Markets now know she’s going to look more quickly at the anti-fragmentation tool, but beyond that, not much concrete.”
As for government bonds, the yield on ten-year US Treasury bonds fell seven basis points to 3.3258%.
OIL
The oil market is rising on the prospect of limited global supply combined with a recovery in consumption this summer.
Brent gained 0.29% to 118.85 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.45% to 115.83 dollars.
(Written by Laetitia Volga)
