New rise in sight in Europe ahead of Powell’s speech

New rise in sight in Europe ahead of Powell's speech


THE MAJOR EUROPEAN STOCK EXCHANGES ARE INDICATED AT THE OPENING

by Claude Chendjou

PARIS (Reuters) – Major European stock markets point higher at the open on Friday ahead of U.S. Federal Reserve (Fed) Chairman Jerome Powell’s highly anticipated speech at the Jackson Hole symposium, as that uncertainty hangs over the rate of growth of interest rates in a context of fears about the economic situation.

Index futures contracts suggest a 0.37% gain for the Paris CAC 40, as well as the Frankfurt Dax. London’s FTSE 100 is expected to rise 0.26% and the EuroStoxx 50, meanwhile, could gain 0.41% at the open.

Fed official Raphael Bostic said Thursday that he was divided on a 50 or 75 basis point hike in US central bank rates in September, following a 225 point rise in the cost of credit since March, while a recession in the United States is always feared. state

The second estimate of the US gross domestic product (GDP) for the second quarter, however, showed a slightly less significant contraction than initially expected (-0.6% annualized rate against -0.9% in the first estimate).

Investors will watch Jerome Powell’s speech, scheduled for 14:00 GMT at the annual conference of central bankers, to determine whether the economic downturn is likely to alter the US central bank’s strategy, analysts say.

Investors, meanwhile, appear to be taking risk and continue to buy cheaply, particularly major tech stocks, which are nonetheless sensitive to rate hikes.

“The market right now is sort of under the illusion that the Fed will come to the rescue in case of trouble,” said Todd Lowenstein, equity strategist at Union Bank. However, he believes that the US central bank will be determined in its fight against inflation.

ON WALL STREET

The New York Stock Exchange closed higher on Thursday, buoyed by technology stocks amid falling bond yields ahead of Jerome Powell’s speech.

The Dow Jones Industrial Average gained 0.98% to 33,291.78 points, the broader S&P-500 gained 1.41% to 4,199.12 points and the Nasdaq Composite advanced 1.67% to 12,639.27 points.

IN ASIA

The Tokyo Stock Exchange closed higher on Friday, on the back of Wall Street and technology stocks. The Nikkei index gained 0.57% to 28,641.38 points and the broader Topix gained 0.14% to 1,979.34 points.

In China, the Shanghai SSE Composite advanced 0.14% and the CSI 300 advanced 0.08%, buoyed by reports in the Wall Street Journal that Washington and Beijing are close to reaching a deal that would allow US authorities to travel to Hong Kong to review audit records. of Chinese companies listed on Wall Street.

Hong Kong’s Hang Seng Index rose 0.49%, while the Seoul Stock Exchange gained 0.15%.

SPEED

The 10-year Treasury yield rose slightly to 3.0425% and the 2-year yield rose to 3.3803% as the probability of a 75 basis point Fed rate hike in September is now 60% in the markets.

The 10-year German Bund yield, a benchmark for the euro zone, came in Friday at 1.323%, virtually unchanged from Thursday’s close.

CHANGES

The US dollar rose slightly, 0.11%, against a basket of benchmark currencies, while commodity-exposed currencies such as the Australian dollar and New Zealand dollar fell 0.3% and 0.0% respectively, a 48% after its strong rally the day before.

The euro, down 0.11%, is trading at $0.9963, unable to rise permanently above parity with the US currency since Monday.

The pound fell 0.27% to $1.1806 as Ofgem, the British energy sector regulator, announced on Friday an 80% increase in the energy price cap for consumers from October, raising the bill. annual households at an average of 3,549 pounds (4,203 euros).

OIL

Oil prices rose again this Friday after losing around two dollars the day before in reaction to expectations of a sustained monetary tightening in the United States that could affect the demand for crude oil and a possible recovery in Iranian exports as part of the recovery of the agreement on its nuclear program. However, earnings are limited, pending Jerome Powell’s speech.

Brent rose 1.01% to $100.34 a barrel and US light crude (West Texas Intermediate, WTI) rose 1.09% to $93.53 a barrel.

(Written by Claude Chendjou, edited by Kate Entranger)

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