Stocks expected to fall pending US inflation – 06/10/2022 at 08:02

MAJOR EUROPEAN STOCK EXCHANGES EXPECTED TO FALL

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by Laetitia Volga

PARIS (Reuters) – The main European stock markets are expected to fall on Friday at the opening the day after the announcements of the European Central Bank, which confirmed the tightening of its monetary policy, and before the publication of the highly anticipated inflation figures. American.

According to the first indications available, the Parisian CAC 40 could lose 0.74% at the opening, the Dax in Frankfurt would fall by -0.8%, the FTSE in London by -0.79% and the EuroStoxx 50 by -0.81%.

The main euro zone indices widened their losses on Thursday after the ECB announced its intention to end its policy of bond purchases on the markets on July 1 and to raise its rates in July by a quarter. points, specifying that she did not rule out a bigger rise in September if inflation does not slow down.

“Global equities came under pressure after the ECB presented its guidance, and Christine Lagarde, the institution’s chair, highlighted upside inflation risks,” ANZ analysts said.

“And with energy prices still high, it’s not yet clear that inflation has peaked. The Federal Reserve’s policy guidance and actions may also need to be more ‘hawkish’ for longer.” , they added.

The other big meeting of the week for the markets will take place at 12:30 GMT with the publication by the Labor Department of the monthly consumer price figures in the United States, which the Reuters consensus expects to be up by 8.3 % on an annual basis, as in April.

The “core CPI” index should return to 5.9% year on year according to the consensus, which would mark a slowdown compared to +6.2% the previous month but a pace still well above the Fed’s objective .

A WALL STREET

The New York Stock Exchange ended lower on Thursday as investors were cautious ahead of the May inflation release.

The Dow Jones index fell 1.94% to 32,272.79 points, the S&P-500 lost 2.38% to 4,017.82 points and the Nasdaq Composite fell 2.75% to 11,754.23 points.

All eleven major sectors of the S&P 500 ended in the red, with the communications services (-2.75%) and technology (-2.72%) sectors posting the biggest declines.

Apple and Amazon fell 3.6% and 4.15% respectively, contributing significantly to the declines in the S&P-500 and Nasdaq.

Adding to the jitters, the yield on ten-year US government bonds climbed to its highest level since May 11, at 3.073%.

IN ASIA

After five consecutive sessions in the green, the Nikkei index in Tokyo lost -1.37%, below the threshold of 28,000 points, in the wake of Wall Street.

Conversely, the trend is positive in China where the equity markets are benefiting from the return of foreign investors. The CSI 300 advances by 0.61% and the Shanghai SSE by 0.74%.

RATE

On the bond market, the yield on ten-year Treasuries rose slightly to 3.0512%.

Following the announcements of the ECB, the yield of the ten-year German Bund climbed Thursday to 1.470%, its highest level in eight years. Its Italian equivalent jumped 22 basis points and reached a peak in session since October 2018, at 3.717%.

CHANGES

The “dollar index”, which measures the variations of the American currency against a basket of other reference currencies, fell by -0.12%.

The euro is picking up some color against the dollar (+0.23%) after falling 0.93% the day before and reaching a low of more than two weeks at 1.0609 in reaction to the ECB’s announcements.

While the Frankfurt institution has pledged to raise rates for at least the next two meetings, the extent of the rise in September is uncertain and Christine Lagarde spoke of the risk of fragmentation in eurozone bond markets, c ie the divergence in financing costs between the most indebted countries, such as Italy, and the countries deemed to be safe, such as Germany.

“We know that quantitative easing is fading, but they themselves started to float the idea of ​​a special contingency plan to tackle the risk of fragmentation. The market was hoping for a bit more clarity The absence of any detail is a disappointment,” Huw Roberts, head of research at Quant Insight, said Thursday.

OIL

Oil prices are down as fears over new COVID-19 measures in China outweigh strong demand from the United States.

Brent fell -0.43% to 122.54 dollars a barrel and US light crude (West Texas Intermediate, WTI) lost -0.34% to 121.1 dollars.

(edited by XX)

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