MARCHES-SYNTH-SE-4: Withdrawal in sight on Wall Street, Europe hesitates
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EUROPEAN STOCK EXCHANGES EVOLVE IN DISPERSED ORDER AT MID-SESSION
by Marc Angrand
(Archyde.com) – Wall Street is expected to fall on Thursday following two sessions of rebound and European stocks moved in scattered order at mid-session, the latest news of the war in Ukraine prompting caution, while some investors wonder regarding the risk of a monetary policy error in the United States given the announced pace of the upcoming rate hike.
Futures contracts on the main New York indices signal an opening down 0.28% for the Dow Jones, 0.35% for the Standard & Poor’s 500 and 0.47% for the Nasdaq.
The latter has regained 6.8% over the last two sessions and the S&P 500 4.43%.
In Paris, the CAC 40 lost 0.03% to 6,586.63 points around 11:45 GMT following gaining up to 0.7% in the early morning. In London, the FTSE 100 took 0.09% but in Frankfurt, the Dax fell 0.81%.
The EuroStoxx 50 index is down 0.46% while the FTSEurofirst 300 is up 0.16% and the Stoxx 600 is virtually stable.
The rise was widespread and sustained at the start of the day following the Fed’s unsurprising announcement of an initial quarter-point rate hike likely to be followed by six others by the end of the year. statements by its president, Jerome Powell, on the ability of the US economy to withstand such rapid monetary tightening.
But “this acceleration of the tightening increases the risk of a hard landing in the future and suggests an increased risk of recession over the next two years”, underlines Allison Boxer, US economist at Pimco.
The European indices also nosedived following the upward revision of inflation in the euro zone in February to 5.9% at an annual rate, a level unprecedented since the creation of the single currency.
The situation in Ukraine is also giving rise to renewed concern as the last few days had been dominated by the hope of a negotiated solution to the conflict with Russia. The Kremlin notably denied press reports evoking significant progress in the negotiations with Kiyv.
Investors are now awaiting, at 12:00 GMT, the decisions of the Bank of England, which might raise its key rate for the third time in as many monetary policy meetings.
Video: The war in Ukraine weighs down growth and pushes up inflation in 2022, warns the ECB (France 24)
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VALUES IN EUROPE
The biggest sectoral increase of the day in Europe is for the oil and gas compartment (+ 1.51%), which takes full advantage of the rebound in the price of a barrel of crude. In Paris Vallourec gains 1.49% and TotalEnergies 0.6%.
Down, German industrial group Thyssenkrupp fell 10.36% following suspending its free cash flow forecast for the year and questioning the split of its steel activities due to the conflict in Ukraine.
Renault lost 5.05%, Exane BNP Paribas having lowered its recommendation to “neutral” by emphasizing its exposure to the European market.
RATE
Yields on US Treasuries fell following the highs reached on Wednesday in reaction to Fed announcements, a movement which mainly marked a flattening of the yield curve, a sign that the markets anticipate both a sharp rise in key rates and an increased risk of recession in the medium term.
The ten-year returns to 2.1385% once morest 2.246% at its highest on Wednesday and the two-year to 1.9385% once morest a peak at 2.002%.
On the European market, the ten-year German Bund yield fell less than a basis point to 0.38%.
CHANGES
The dollar is losing ground once morest the other major currencies (-0.40%) and is moving away from the recent highs to which it has been taken by the tension linked to Ukraine, which allows the euro to rise around 1 ,1060.
The pound sterling also remains on the rise once morest the greenback as once morest the euro before the announcements of the BoE.
OIL
The oil market amplified its rebound over the hours following the International Energy Agency warned of the risk of seeing the world supply of crude and refined products cut by three million barrels per day (bpd ) from April due to sanctions once morest Russia.
Brent gained 5.55% to 103.46 dollars a barrel and American light crude (West Texas Intermediate, WTI) lost 5.21% to 99.99 dollars.
Both fell on Wednesday in response to an unexpected rise in stocks in the United States.
(XXXX report, French version Marc Angrand)
