Small decline in Europe, rise on Wall Street ahead of the Fed
(Reuters) – European shares edged lower on Wednesday but rose mid-session as Wall Street awaited decisions from the U.S. Federal Reserve, which is expected to announce its next rate hike but may moderate its rhetoric after that.
In Paris, the CAC 40 lost 0.21% (14.19 points) to 6,730.79 points. In London, the FTSE 100 fell by 0.09%, and in Frankfurt, the Dax fell by 0.26%.
The EuroStoxx 50 index was down 0.29%, the FTSEurofirst 300 was down 0.04% and the broader Stoxx 600 was down 0.02%.
At the close in Europe, the US Dow Jones gained 0.71%, the Standard & Poor’s 500 gained 0.72% and the Nasdaq Composite gained 0.77%.
The Fed’s Federal Open Market Committee (FOMC) is expected to announce another half-point increase in the Fed funds rate target at 7 p.m., but investors are largely awaiting its new policy outlook. monetary policy, growth, inflation and unemployment pending President Jerome Powell’s press conference at 19:30 GMT.
The main questions for markets are the scale of the next rate hikes and the possibility of a pause in monetary tightening before the spring.
In Europe, they partly overshadowed the announcement in November that British inflation had fallen to 10.7% over the year, well above the Bank of England’s (BoE) target. such as the European Central Bank (ECB) and the central banks of Switzerland and Norway.
In Europe, the day’s biggest sectoral decline was in the commodities division (-1.71%), once again affected by the health situation in China, which weighed on base metal prices.
ArcelorMittal lost 4.35% in Paris, and mining giant Rio Tinto lost 2.18% in London.
In turn, the transport and leisure sector (-1.40%) was punished by a 7.99% decline in tour operator TUI, which announced its intention to implement a capital increase to pay for government aid received during the COVID-19 crisis.
Carrefour lost 3.79% after Belgium’s Colruyt (-14.84%), which was heavily sanctioned half a year after expectations.
On the upside, Zara’s parent company, Inditex, gained 3.07% after its results.
Expectations from the Fed punished the greenback, which fell 0.26% against other major currencies, not far from a six-month low hit on Tuesday after US inflation statistics.
The euro, which crossed $1.0670 for the first time since June, gained 0.25% to trade at 1.0657.
The pound only briefly lost ground after the British inflation figures and is now back on the rise against the dollar (+0.47%).
Eurozone benchmark bond yields ended the day higher, supported by data from several sources inside the institution, which provided forecasts on Thursday that inflation would still be above 2% in 2025.
The ten-year German, after a peak of 1.995% in late morning, rose three basis points to end the session at 1.934%.
The trend in the US market is more volatile ahead of the Fed’s announcements: the ten-year is steady at 3.5029% and the two-year is down more than five points to 4.1781%.
The oil market, which fell at the beginning of the day, is now on a sharp rise, supported by forecasts of the International Energy Agency (IEA), which, like OPEC, expects strong demand next year.
The U.S. Energy Information Administration’s (EIA) announcement last week of an unexpected increase in crude oil inventories in the United States had a brief effect on prices.
Brent rose by 2.27% to $82.51 a barrel, American light oil (West Texas Intermediate, WTI) rose by 2.32% to $77.14.
TO FOLLOW ON THURSDAY:
In addition to a slew of monetary policy decisions expected in Europe, Thursday’s session will be dominated by swings in US economic indicators, including November retail sales, weekly jobless claims and the Philly Fed activity index.
(Written by Marc Angrand)