2023-09-22 06:40:00
A trader in London, Great Britain
by Claude Chendjou
PARIS (Archyde.com) – The main European stock markets are expected to fall on Friday amid fears over changes in interest rates following announcements from several central banks, including the American Federal Reserve (Fed) and the Bank of England (BoE) while activity indicators in Europe are expected during the day.
According to the first available indications, the Parisian CAC 40 should lose 0.27% at the opening, the Dax in Frankfurt 0.29% and the FTSE 100 in London 0.21%. The EuroStoxx 50 index is expected to decline by 0.24%.
Rate fears have returned to markets since the Fed warned that its monetary policy might remain at a restrictive level for longer than expected, as the battle once morest inflation is far from over, according to its president Jerome Powell.
Goldman Sachs has pushed back a possible Fed rate cut to the fourth quarter of 2024.
In addition to the Fed, several ECB officials, such as Joachim Nagel and Martins Kazaks, have also warned of persistent inflationary pressures, deeming any debate on a rate cut premature, while UBS said it expected that the The Frankfurt institution will maintain the level of its rates unchanged until June 2024 before a reduction of 25 basis points per quarter.
The Bank of England, for its part, interrupted its long series of interest rate increases on Thursday, but warned that it would not take the recent fall in inflation in the United Kingdom for granted, adding that it was ready to increase once more the cost of credit if necessary.
The Swedish and Norwegian central banks have already tightened their monetary policy, without ruling out further rate increases, while the Swiss National Bank (SNB) has opted for the status quo.
“There are a lot of mixed messages and information, and often these arise around key moments,” said Craig Ebert, economist at BNZ, adding that markets generally sense risk when indices are at a peak.
Beyond monetary policy, investors are waiting from 07:15 GMT for the monthly PMI indices which might provide indications on the economic outlook.
A WALL STREET
The New York Stock Exchange ended sharply lower on Thursday, as investors’ appetites were weighed down by the Fed.
The Dow Jones index fell 1.08%, or 370.46 points, to 34,070.42 points.
The broader S&P-500 lost 72.20 points, or 1.64%, to 4,330 points.
The Nasdaq Composite fell 245.14 points (1.82%) to 13,223.99 points.
Particularly sensitive to interest rates, high-growth stocks like Amazon, Nvidia and Apple finished in the red, weighing on the S&P-500 and the Nasdaq which fell to their lowest levels since June.
Citing interest rates, but also the strike by the main union of American auto workers, a possible partial shutdown of the American federal administrations next month, or even oil prices, Thomas Martin, portfolio manager at GLOBALT, said the prospect of a soft landing for the economy was fading.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index ended down 0.45% to 32,425.19 points and the broader Topix fell 0.3% to 2,376.27 points.
At the end of two days of meetings, the Bank of Japan (BoJ) stuck to its ultra-accommodating monetary policy on Friday and made no change to its outlook.
The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) is stable but heading towards a loss of 2.6% over the whole week.
In China, the Shanghai SSE Composite advanced 1.19% and the CSI 300 gained 1.37% as public broadcaster CCTV reported that regulatory authorities announced a series of measures aimed at promoting the development of private economy.
VALUES TO FOLLOW IN EUROPE:
EXCHANGES/RATES
The yen lost up to 0.4% once morest the American greenback, to 148.09 per dollar following the BoJ’s decision to leave its rates unchanged and maintain its policy of controlling the yield curve.
The American currency also progressed (+0.12%) once morest a basket of reference currencies, including the euro which trades at 1.0648 dollars (-0.09%).
The pound sterling, which fell the day before to 1.22305, a six-month low, following the BoE’s decision to opt for the status quo, fell once more on Friday, by 0.15% to 1.2276 dollars.
On the bond market, the yield on ten-year US Treasury bonds rose once more, by a little more than one basis point, to 4.4966%, at a 16-year peak. Its German equivalent is stable, at 2.737%.
OIL
The oil market is on the rise once more, supported by fears of a supply deficit, as Russia temporarily banned, with immediate effect, exports of gasoline and diesel to all countries except Russia. Belarus, Kazakhstan, Armenia and Kyrgyzstan.
Brent rose 0.43% to $93.70 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.6% to $90.17.
(Written by Claude Chendjou, edited by Nicolas Delame)
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