EUROPEAN STOCK MARKETS ARE EXPECTED TO FALL
by Laetitia Volga
PARIS (Archyde.com) – The main European stock markets are expected to fall on Thursday at the opening following the fall of Wall Street the day before once morest a backdrop of serious concern regarding the impact, in particular on companies, of the level of inflation and the central bank rate hikes.
The first indications available indicate a drop of 0.61% for the Paris CAC 40, 0.65% for the Dax in Frankfurt, 0.56% for the FTSE in London and 0.6% for the EuroStoxx 50 .
European stocks fell more than 1% on Wednesday as lingering concerns regarding the global economy swept away relief from an improving health crisis in China that had buoyed stocks the day before.
The pullback was much larger on Wall Street, where the S&P-500 and Dow Jones saw their worst session since June 2020, on fears of a significant economic slowdown as US Federal Reserve Chairman Jerome Powell, expressed his determination to bring down inflation.
Soaring costs are not without consequences for companies: the American retail group Target unscrewed on Wednesday following its poor results, citing supply problems and rising prices, concerns that echo those expressed by its rival Walmart the day before.
“Tuesday’s rebound was too optimistic (…) It must be said that the worry regarding inflation has never disappeared since the beginning of the year. But if things have not reached a point of non- return, they seem to be heading towards an ‘out of control’ situation,” said Hebe Chen, an analyst at IG.
VALUES TO FOLLOW:
A WALL STREET
On the New York Stock Exchange, the Dow Jones index fell 3.57% to 31,490.07 points, the S&P-500 lost 4.04% to 3,923.68 points and the Nasdaq Composite fell 4.73% at 11,418.15 points.
Target plunged 25% following reporting quarterly profit halved by rising prices and warned of the risk of further margin deterioration.
It was its worst session since the October 19, 1987 “Black Friday” crash and the group’s market capitalization was truncated by around $25 billion.
The number of building permits hit a five-month low in April, suggesting a slowdown in the housing market as mortgage rates rise.
Futures contracts give an opening this Thursday in scattered order but in small gaps.
IN ASIA
In the wake of Wall Street, the Nikkei fell 1.69% in Tokyo.
Stock markets in mainland China fell slightly but the Hang Seng in Hong Kong dropped 2.52%, weighed down by Tencent ({0700.HK;DSPLY_NAME}%) which announced that its quarterly profit had halved.
RATE
On the bond market, government bond yields are on the rise once more, having fallen the day before in a move back towards safe-haven assets.
The yield on ten-year Treasuries takes more than two basis points – following losing more than eleven on Wednesday – to 2.9058%.
CHANGES
Safe-haven currencies are depreciating following posting strong gains in the previous session due to growing worries regarding global growth.
The dollar fell 0.17% once morest a basket of benchmark currencies and the yen lost 0.47% once morest the greenback.
The single European currency takes for its part 0.26% to 1.0493 dollars.
OIL
The oil market is trending higher as fears of insufficient global supply take precedence over those of slowing economic growth.
In addition, the US Energy Information Administration (EIA) announced a drop in crude inventories in the United States last week while an increase was expected.
Brent rose 1.03% to 110.23 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.38% to 110.01 dollars.
MAIN ECONOMIC INDICATORS ON THE AGENDA FOR MAY 19
COUNTRY GMT INDICATOR PERIOD PREVIOUS CONSENSUS
US 12:30 p.m. Unemployment claims week at 200.000 203.00
May 14
US 12:30 PM Activity Index “Philly May 16.0 17.6
Fed”
(Written by Laetitia Volga, edited by Nicolas Delame)