EUROPEAN STOCK EXCHANGES EXPECTED TO FALL
by Laetitia Volga
PARIS (Reuters) – The main European stock markets are expected to fall on Thursday, investors fear that the measures taken by central banks to curb inflation will drag the world economy into recession.
According to the futures contracts, the Paris CAC 40 could yield 1.43% at the opening, the Dax in Frankfurt would lose 1.27%, the FTSE in London would fall by 1.27% and the EuroStoxx 50 by 1. .43%.
The Stoxx 600, the European benchmark index, is currently down 9.3% over the April-June period, which would mark its worst quarterly performance since the first quarter of 2020.
Over the month, it has lost 6.75% for the moment and this decline should be accentuated at the open as a new difficult session is looming for equities in the face of the nervousness of market players on the outlook for evolution of the economy, and by extension on the profits of the companies, under the action of the central banks.
Federal Reserve Chairman Jerome Powell has acknowledged that there is a risk that the central bank is overdoing it in terms of monetary policy but that the biggest danger for the economy is if it fails to stabilize prices. .
“A slowdown or mild recession is almost consensus at this point,” said Matt Stucky, portfolio manager at Northwestern Mutual Wealth Management Company. “The question is how far the Fed should go to control inflation.”
Investors will pay attention to the publication at 12:30 GMT of the PCE index of inflation and household consumption expenditure for the month of June in the United States.
Before that, they will have learned in the morning of the first estimate of inflation in France in June.
AT WALL STREET
The New York Stock Exchange ended in scattered order but with small differences on Wednesday, at the end of a seesaw session, while investors favored caution as the end of the month approached and complicated quarter, with the S&P-500 heading for its worst first half in more than fifty years.
The Dow Jones index gained 0.27% to 31,029.31 points, the S&P-500 lost 0.07% to 3,818.83 points and the Nasdaq Composite fell 0.03% to 11,177.89 points.
Representatives of the Fed have reiterated in recent days the determination of the US central bank to stem the surge in inflation, suggesting a further hike in interest rates of 75 basis points in July. They believe that this tightening will not plunge the economy into recession.
In economic news, US gross domestic product (GDP) contracted slightly more than previously forecast in the first three months of the year (-1.6%), consumer spending revised downwards from 3.1% to 1.8%.
Futures are signaling an open decline of 0.66% to 1.17% at the moment.
The Nikkei on the Tokyo Stock Exchange fell 1.54% as Japanese industrial production in May posted its biggest monthly decline in two years due to health restrictions in China and component shortages.
Official data shows a decline in industrial production of 7.2% while economists on average expected a decline of only 0.3%.
“This dip suggests that Japan’s recovery is not yet up to snuff…the fact that inventories have remained broadly flat despite falling production suggests that weak demand is playing a role,” he said. said Marcel Thieliant, chief economist at Capital Economics.
Automaker Toyota lost 1.32% after announcing on Wednesday that it had missed its already lowered global production target in May for the third month in a row.
The trend is quite different in China where the markets are benefiting from the return to the growth zone of the PMI indices in the manufacturing and services sectors for the first time since February, after the lifting of containment measures in Shanghai.
The Shanghai SSE Composite advanced 1.56% and the CSI 300 2.02%.
The dollar lost 0.2% against a basket of international currencies after gaining 0.57% thanks to its safe haven status.
The euro, at 1.0462 dollars, rose slightly.
On the government bond market, the yield on ten-year Treasuries stands at 3.0817%, down one basis point. Its German equivalent is also little changed in early trading, at 1.493%.
Oil prices are out of order, amid concerns over global supply and the US Energy Information Agency’s announcement of increased inventories of gasoline and distillate products in the United States last week.
Brent lost 0.15% to 116.09 dollars a barrel and US light crude (West Texas Intermediate, WTI) gained 0.11% to 109.9 dollars.
(Written by Laetitia Volga, edited by Myriam Rivet)