A rally ahead for European equities

A rally ahead for European equities


EUROPEAN STOCK EXCHANGES EXPECTED TO RISE

by Laetitia Volga

PARIS (Reuters) – Major European stock markets are expected to rise at the open on Wednesday, but the rally should be limited by concerns about inflation and central bank tightening that have dominated recent sessions.

The first available indications give a rise of 0.47% for the Parisian CAC 40, 0.64% for the Frankfurt Dax, 0.22% for the London FTSE and 0.65% for the EuroStoxx 50.

The Parisian market chained its fourth consecutive session of decline on Tuesday and the Stoxx 700 lost 0.7%, which raised its decline in the last three sessions to more than 3% due to fears about the rise in rates by central banks , fueled by strong US indicators and comments from various officials at the Federal Reserve and the European Central Bank (ECB).

Klaas Knot and Madis Mueller, members of the ECB’s Governing Council, said a three-quarter point hike in policy rates should be discussed by at least September, while Bundesbank President Joachim Nagel called for swift action. in the face of rising prices.

In fact, German inflation has reached its highest level in almost 50 years, at 8.8%. Consumer price figures for France and for the euro zone as a whole will be released in the morning.

ADP’s monthly US private sector employment survey is due out at 12:15 GMT, two days ahead of the Labor Department’s report.

ON WALL STREET

The New York Stock Exchange closed lower on Tuesday, the increase in the number of job openings sparking fears that the Fed will continue with monetary tightening considered aggressive.

The Dow Jones Industrial Average fell 0.96%, or 308.12 points, to 31,790.87 points, the S&P-500 lost 44.45 points, or 1.10%, to 3,986.16 points and the Nasdaq Composite .IXIC fell. 134.53 points (-1.12%) to 11,883.14 points.

The number of vacant positions, an indicator of labor market demand, rose by 199,000 to 11.24 million in July, or two vacant positions for every unemployed person, according to the ‘JOLTS’ (Job Turnover and Vacancy Survey) of the Department of Worked. indicating that the labor market remains extremely tight and gives the Fed room to maintain its sharp rate hikes.

Several Fed officials have reiterated their support for further rate hikes, including New York Fed President John Williams, who sees a rate cut next year as unlikely given inflation, and his Richmond counterpart Thomas Barkin. , who believes that the Fed’s commitment to bring inflation back to its 2% target will not necessarily lead to a serious recession.

All 11 sectors of the S&P-500 finished in the red. The energy compartment (-3.36%) recorded the biggest drop, as oil prices fell more than 5% on concerns about the economic slowdown.

Futures are signaling a 0.6% to 0.8% advance.

IN ASIA

The Nikkei on the Tokyo Stock Exchange lost 0.52% after Wall Street fell for the third straight session.

Markets in China are also lower due to a further contraction in manufacturing activity in August and tighter restrictions in some of the country’s major cities in the face of resurgent COVID-19 outbreaks.

Mainland China Large-Cap CSI 300 Index Loses 0.11% Shanghai SSE Composite Falls 0.75%

CHANGES

Hitting a 20-year high on Monday following Jerome Powell’s Jackson Hole speech, the dollar lost some ground against a basket of benchmark currencies (-0.23%).

The euro rose to 1.0039, 0.27% more.

“The only thing keeping the euro around parity is aggressive rhetoric from ECB speakers,” said Rodrigo Catril, a strategist at National Australia Bank.

SPEED

US government bond yields are little changed in the Asian market, with the 10-year bond up less than a basis point at 3.1007% and the 2-year bond unchanged at 3.4561 %.

OIL

The announcement by the American Petroleum Institute (API) of a greater-than-expected drop in gasoline and distillate inventories in the United States allowed the oil market to rebound after a 5.5% drop in price due to fears about the demand.

Brent gained 0.7% to $100.01 a barrel and US light crude (West Texas Intermediate, WTI) 1.13% to $92.68.

(Laetitia Volga, edited by Bertrand Boucey)

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