THE ACTIONS WITHOUT MAJOR CHANGE AFTER THE “MINUTES” OF THE FED
by Claude Chendjou
PARIS (Reuters) – The main European stock markets are expected without much change on Thursday the day after the close in the red on Wall Street and the decline in Asian markets, the minutes of the last monetary policy meeting of the American central bank having left open all options.
Futures contracts on indices suggest an increase of 0.02% for the Dax in Frankfurt, 0.05% for the FTSE 100 in London and 0.01% for the CAC 40 in Paris. The EuroStoxx 50, on the other hand, could fall by 0.11%.
In minutes of its July 26-27 meeting, released Wednesday evening, the US Federal Reserve (Fed) hinted that it was considering reducing the pace of future rate hikes in line with slowing inflation. This message was interpreted by investors as a sign of a less aggressive monetary tightening cycle than expected. Central bank officials, however, also noted that inflationary pressures in the United States were not easing and felt that a decline in prices could take longer than expected.
This mixed message divided investors as all three major Wall Street indexes rose immediately after the release of the “minutes” before subsequently falling back into negative territory.
Inflation, which has weighed on the equity markets since the start of the year, could once again drive the trend in Europe since the final figures for the rise in prices in July in the euro zone will be published at 09:00 GMT.
Reuters consensus calls for a rise of 0.1% m/m and 8.9% y/y, which could increase pressure on the European Central Bank (ECB) to accelerate the pace of policy tightening monetary.
AT WALL STREET
The New York Stock Exchange ended lower on Wednesday, with the Dow Jones index down 0.5% at 33,980.32 points, the broader S&P-500 down 0.72% at 4,274.04 points and the Nasdaq Composite 1, 25% to 12,938.12 points.
The disappointing results of Target (-2.6%) weighed on the distribution sector on Wednesday, which fell by 1.16%, while Kohl’s is due to publish its quarterly accounts on Thursday.
As for economic indicators, weekly listings in the United States, home resales for the month of July and the activity index for the Philadelphia region are on the agenda.
On the Tokyo Stock Exchange, the Nikkei index ended down 0.96%, in the wake of Wall Street, and due to profit taking after Wednesday’s jump which saw the index exceed 29,000 points for the first time since early January.
In China, the Shanghai SSE Composite lost 0.43% and the CSI 300 0.85%.
VALUES TO FOLLOW:
On the currency market, the dollar appreciated by 0.23% against a basket of reference currencies, supported by the “minutes” of the Fed.
The Japanese currency is virtually stable against the greenback, around 135 yen to the dollar, while the euro, down 0.2%, trades at 1.0161 dollars.
Bond yields in Europe continue to rise after Wednesday’s sharp rise: those of the two-year and ten-year German Bund gain respectively around four points and nearly two points to 0.761% and 1.10%.
In the United States, the yields on two-year and ten-year Treasury bonds stand at 3.29% and 2.88% respectively.
The oil market is volatile, with investors torn between fears of a recession and falling crude and fuel inventories last week in the United States amid rising US exports.
Brent fell 0.11% to 93.55 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.22% to 87.92 dollars.
(Written by Claude Chendjou, edited by Kate Entringer)