The US inflation shock has not finished penalizing equities

The US inflation shock has not finished penalizing equities


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PARIS (Reuters) – Major European stocks are expected to fall on Wednesday, the day after Wall Street’s worst close on record since 2020, on higher-than-expected inflation in the United States in August, exacerbating fears of tightening monetary policies.

Index futures suggest a drop of 0.96% for the Paris CAC 40, 0.67% for the Frankfurt Dax, 0.93% for the London FTSE 100 and 0.75% for the EuroStoxx fifty.

The announcement of a 0.1% rise in consumer prices (CPI) in the United States in August, when the markets anticipated a drop in it, was enough to trigger a new panic movement in most markets, without further ado. signals. of a slowdown in inflation that calls into question the preferred scenarios for interest rates and growth.

One week after the decisions of the Federal Open Market Committee (FOMC) of the Federal Reserve, the hypothesis of a rate hike limited to 50 basis points is now completely ruled out and that of 100 points, which was not even mentioned on Monday, it is considered likely at 37% according to the FedWatch barometer, with the 75 basis point scenario being preferred.

Nomura’s economists are among those now favoring the hypothesis of a 100-point increase in the “federal funds” rate next Wednesday.

“Markets are underestimating the anchor level reached by inflation in the United States and the magnitude of the response that the Fed needs to challenge it,” they explain in a note.

Fixed income markets are now pricing in a 4.25% fed funds rate by the end of 2022 and a non-negligible chance of a 4.5% spike in early 2023, says Eugene Leow, senior strategist at Deutsche Bank rates.

However, such a scenario implies a higher risk of the US economy slipping into recession, which is reflected in the increasingly sharp inversion of the US bond yield curve.

Investors will therefore be keeping an eye on monthly US producer price figures to be released at 12:30 GMT. In Britain, inflation showed an unexpected slowdown in August to 9.9% in a year.

VALUES TO FOLLOW:

ON WALL STREET

On the New York Stock Exchange, inflation figures triggered a violent and massive sell-off on Tuesday after four consecutive sessions of increases, which ended in the biggest falls recorded since June 2020.

The Dow Jones fell 3.94%, or 1,276.37 points, to 31,104.97, the Standard & Poor’s 500 lost 177.72 points, or 4.32%, to 3,932.69 and the Nasdaq Composite fell 632, 84 points (-5.16%) to 11,633.57.

At the same time, the CBOE volatility index jumped more than 14%, the highest since July 12.

All the major sectors of the rating closed in red, with the most violent drops being those of telecommunications services (-5.63%), discretionary consumption (-5.22%) and high technologies (-5.35%).

Within the Dow, Boeing and Intel fell almost 7.2%, Apple 5.87% and Microsoft 5.5%.

Index futures suggest an open close at breakeven for now.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index closed with a fall of 2.78% after the wake of the American stock markets, a decline that especially affected large technology stocks such as SoftBank (-4.40%) or Tokyo Electron (-3 .69%).

In China, the Shanghai SSE Composite lost 0.86% and the CSI 300 lost 1.21%.

SPEED

US Treasury yields stabilize in Asian trade after rising CPI figures, with the yield curve inverting widening, reflecting rising recession fears.

The two-year bond, at 3.7566%, recovered to its highest level since 2007, while the ten-year bond, at 3.4139%, returned to its mid-June levels.

The gap between the two terms exceeds 34 basis points, compared to less than 22 points on Monday night.

In Europe, the German 10-year bond, which jumped nearly eight basis points on Tuesday, fell slightly in early trading to 1.716%.

CHANGES

The dollar lost 0.04% against other major currencies, a small part of the spectacular rise registered on Tuesday (+1.37%, its best daily performance since March 2020 and the start of the coronavirus crisis).

Against the yen, the dollar rose in the session to 144.95, very close to last week’s 24-year high, before starting to slide again in reaction to reports from the Nikkei that the Bank of Japan has begun preparations for possible interventions in the foreign exchange market.

The euro is almost flat at $0.9971 after falling to 0.9954. But it was trading near $1.02 on Tuesday before the release of US inflation figures.

OIL

The prospect of another sharp rise in US rates that could dampen economic activity is weighing on the oil market and overshadowing relative optimism from OPEC, which stood by its demand growth forecast on Tuesday.

Brent fell 0.49% to $92.71 a barrel and US light crude (West Texas Intermediate, WTI) fell 0.46% to $86.91.

MAIN ECONOMIC INDICATORS OF THE SEPTEMBER 14 AGENDA:

COUNTRY GMT INDICATOR PERIOD PRIOR CONSENSUS

EZ 09:00 Industrial Production July -1.0% +0.7%

– more than one year +0.4% +2.4%

USA 12:30 Producer price August -0.1% -0.5%

– more than one year +8.8% +9.8%

THE MARKET SITUATION:

(Some data may show a slight change)

ASIAN SCHOLARSHIPS

Indices Last Var. Var. %THE LAST YEAR

points

Nikkei-22 27818.6 -796.01 -2.78% -3.38%

5 2

1947.46 -39.11 -1.97% -2.25%

Hong Kong 18848.4 -478.43 -2.48% -19.44%

3

Taiwan 14658.3 -236.10 -1.59% -19.54%

1

Seoul 2411.90 -37.64 -1.54% -19.00%

Singapore 3254.69 -35.39 -1.08% +4.19%

Shanghai 3238.57 -25.23 -0.77% -11.02%

Sydney 6828.60 -181.10 -2.58% -8.27%

The fence in Tokyo

: [.TFR]

WALL

STREET

Fence

previous :

Indices Last Var. Var. %THE LAST YEAR

points

Dow Jones 31104.9 -1276.3 -3.94% -14.40%

7 7

S&P 500 3,932.69 -177.72 -4.32% -17.49%

Nasdaq 11633.5 -632.84 -5.16% -25.64%

7

Nasdaq 12033.6 -706.10 -5.54% -26.26%

100 2

Detail of the session on the Wall

Street: [.NFR]

“The Day Coming” – Update on the

next session on wall street

[DAY/US]

MARKETS

EUROPEANS

Futures on the CAC 40 and on

the eurostoxx50

The values ​​to follow

Paris and Europe:

[WATCH/LFR]

The session

previous :

Closing Rates Var. Var. %THE LAST YEAR

points

Eurofirst 1662.44 -24.10 -1.43% -12.05%

300

Eurostoxx 3586.18 -60.33 -1.65% -16.57%

fifty

CAC40 6,245.69 -87.90 -1.39% -12.68%

Dax-30 13,188.9 -213.32 -1.59% -16.97%

5

FTSE 7385.86 -87.17 -1.17% +0.02%

SMI 10891.5 -99.21 -0.90% -15.41%

4

CHANGES

Var. %THE LAST YEAR

Euro/USD 0.9975 0.9970 +0.05% -12.25%

DLR/Yen 143.74 144.55 -0.56% +24.93%

Euro/Yen 143.39 144.08 -0.48% +10.03%

DLR/CHF 0.9617 0.9613 +0.04% +5.43%

Euro/CHF 0.9593 0.9583 +0.10% -7.48%

Stg/Dlr 1.1495 1.1491 +0.03% -15.03%

Index $ 109,750 109,815 -0.06% +14.12%

0 0

SPEED

Last Var. Spread/Bund

(points)

10-year bonds 1.7140 -0.0110

Bund 2 1.3960 +0.0130

year

OATS 10 2.2780 -0.0080 +56.40

year

10-year Treasury 3.4159 -0.0070

Treasury 2 years 3.7587 +0.0030

OIL

(Current Precedent Var Var.% YTD

dollars) not

Gross 86.97 87.31 -0.34 -0.39% +42.08%

usa light

Brent 92.76 93.17 -0.41 -0.44% +40.48%

(Written by Marc Angrand, with Kevin Buckland in Tokyo and Stella Qiu in Sydney)

#inflation #shock #finished #penalizing #equities

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