Stability, decline is expected in Europe before the Fed’s announcements on Wall Street
PARIS (Reuters) – Wall Street was expected to see little change on Wednesday as European stock markets fell mid-session and the dollar lost ground just hours before the U.S. Federal Reserve announced its monetary policy decisions. As several indicators show, all markets are hoping for a decline in inflation.
Futures contracts on major New York indexes pointed to a virtually unchanged opening for the Dow Jones, as did the Standard & Poor’s 500 and the Nasdaq.
In Paris, the CAC 40 lost 0.38% to 6,719.44 by 12:05 GMT. In London, the FTSE 100 fell by 0.23%, and in Frankfurt, the Dax fell by 0.52%.
EuroStoxx 50 index fell by 0.37%, FTSEurofirst 300 by 0.4% and Stoxx 600 by 0.46%.
Major US indexes ended in the green on Tuesday, but remained below session highs after the announcement of a slowdown in US consumer prices, with CPI growth falling to 7.1% in November.
For most investors, the figure does not call into question the scenario of a 50 basis point rate hike on Wednesday, but it encourages some to bet on a pause in monetary tightening from March and therefore a price below the “terminal” rate. expected to date.
Elsewhere, UK inflation figures released earlier in the day showed a sharper-than-expected slowdown, with UK price inflation at a one-time 10.7% versus the consensus of 10.9%.
Still, questions remain about the outlook of FOMC committee members, the Fed’s monetary policy committee and the tone President Jerome Powell will choose to deliver at a press conference.
Investor caution is also fueled by recurring fears that global growth will slow more markedly than expected in 2023. The managing director of the International Monetary Fund, Kristalina Georgiyeva, thus declared to Agence France Presse that it is “very likely” that the IMF will go down. Forecast for China.
WALL STREET VALUES WILL BE OFFERED
VALUES IN EUROPE
Among the biggest sector decliners in Europe at mid-session were the commodities division, where the Stoxx index lost 1.99%, and transport and leisure (-1.36%).
The latter was penalized by a 6.94% drop in tour operator TUI, which announced its intention to carry out a capital increase to pay for state aid received during the COVID-19 crisis.
On the upside, Zara’s parent company, Inditex, gained 2.18% after its results.
RATE
The yield on the two-year U.S. Treasury bond, the most sensitive to changes in Fed policy expectations, intensified a slide that began on Tuesday after the consumer price numbers: it lost more than four basis points to 4.1865%, the lowest since Oct. 6. .
The decade is virtually unchanged at 3.501%.
In the European market, benchmark yields are rising sharply as a result of gains from the bond rally of recent weeks: the German ten-year, at 1,984%, recovers eight basis points, erasing Tuesday’s decline.
CHANGES
The dollar remains in a downtrend against other major currencies (-0.11%), with most traders continuing to bet on moderation in the Fed’s rhetoric and strategy.
The euro rose to $1.0644 (+0.13%). It hit 1.0673 in Tuesday’s session, its highest level since June.
The pound only briefly lost ground following the British inflation figures and is now back on the rise against the dollar (+0.16%).
OIL
The oil market, which had fallen earlier in the session, rose on a weaker dollar as traders digested data from the American Petroleum Institute (API) showing an unexpected increase in US crude inventories.
Brent crude, which fell to $80.11 a barrel in the morning, is now up 0.97% to $81.46, while US West Texas Intermediate (WTI) is up 1.03% to $76.17 after settling at $74.90. .
(Writing by Marc Angrand Editing by Kate Entringer)
