File photo of a man under an umbrella in the colors of the British flag next to the London Stock Exchange building
PARIS (Archyde.com) – The main European stock markets are expected to fall on Wednesday amid ever-increasing fears of recession, a new surge in bond yields and persistent questions regarding Britain’s budgetary credibility.
Index futures suggest a drop of 0.53% for the CAC 40 in Paris, 1% for the Dax in Frankfurt, 0.74% for the FTSE 100 in London and 0.87% for the Euro Stoxx 50.
All have already finished in the red on Tuesday following spending most of the day in positive territory, the information on a possible sabotage of the Nord Stream 1 and 2 gas pipelines in the Baltic Sea having revived risk aversion at the very end of the session.
The broad European Stoxx 600 index now shows 10 declines over the last 11 sessions.
Market sentiment remains dominated by fears of a marked slowdown in global growth and tighter monetary policies, which continue to prompt massive sell-offs in bond markets.
General nervousness is also fueled by questions regarding the British government’s ability to regain market confidence following the shock caused by its recovery plan.
The International Monetary Fund (IMF) openly criticized London’s fiscal policy on Tuesday, saying it risked widening inequality and weakening monetary policy. Meanwhile, Moody’s Investors Service warned that massive unfunded tax breaks might undermine government credibility.
RATE
The yield on ten-year US Treasuries is hovering around the 4% mark in Asian trading, the highest in 12 years, following jumping 50 basis points in a week.
The five-year hit a 15-year high at 4.251% and the two-year, at 4.2788%, is at its highest since 2007.
St. Louis Federal Reserve Chairman James Bullard argued for more rate hikes on Tuesday, his Chicago counterpart Charles Evans said the “fed funds” rate should be raised by at least 100 additional basis points by the end of the year and that of Minneapolis, Neel Kashkari, ensured that the leaders of the institution were united by evoking a monetary policy “opportunely offensive”.
Wells Fargo analysts now estimate that the U.S. central bank’s key rate should be between 4.75% and 5% before the end of the first quarter of 2023.
In Europe, the ten-year German, which had jumped 14 points on Tuesday, retrocedes a little more than one in the first trade to 2.24%.
A WALL STREET
The New York Stock Exchange ended in disarray on Thursday, the words of Fed officials having overcome the jump observed at the start of the session.
The Dow Jones index fell 0.43%, or 125.82 points, to 29,134.99 and the Standard & Poor’s 500 lost 7.44 points, or 0.21%, to 3,647.29 points, its lowest. closing level in two years, while the Nasdaq Composite advanced 26.58 points (+0.25%) to 10,829.50, thanks among other things to the gains of Tesla (+2.51%) and Nvidia (+1 .51%).
Futures so far suggest an opening down 0.3% to 0.8%, the seventh straight decline for the S&P 500, which is approaching its 200-day moving average (3,590 points). , a key technical threshold.
IN ASIA
At the Tokyo Stock Exchange, the Nikkei index ended down 1.5%, the lowest since early July. Technology is suffering in particular from information from Bloomberg that Apple has given up on increasing production of its new iPhones this year for lack of sufficient growth in demand.
In China, the Shanghai SSE Composite lost 0.89% and the CSI 300 0.96%. The real estate sector is suffering from reports of a default by the promoter CIFI Holdings, which has not denied and fell by 26.77% in Hong Kong.
The MSCI index of Asian markets excluding Japan fell to its lowest since April 2020.
CHANGES
the renewed risk aversion is also reflected in a new rise in the dollar, which appreciated by 0.27% once morest a benchmark basket, to a new high of more than 20 years.
This rise is at the expense of the euro, which fell to 0.9559 (-0.34%), the lowest since June 2002, and above all the pound sterling, which fell 0.49% to 1, 0678 dollars.
The Chinese yuan, meanwhile, hit a new all-time low of 7.2350 per dollar.
OIL
The oil market retreats despite the risk of Hurricane Ian disrupting production in the Gulf of Mexico, the trend being mainly influenced by the fear of a drop in global demand and the rise of the dollar.
Additionally, American Petroleum Institute (API) figures obtained from market sources show a sharp increase in crude inventories in the United States.
Brent fell 1.4% to 85.06 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.34% to 77.45 dollars.
(Writing by Marc Angrand, editing by Kate Entringer)
