Modest rise in Europe, yen falls after BoJ
PARIS (Reuters) – Major European stock markets are expected to open slightly higher on Wednesday, with the yen falling sharply after the Bank of Japan’s (BoJ) surprise decision to leave monetary policy unchanged.
Futures contracts show an increase of 0.05% for the Paris CAC 40, 0.16% for the Dax in Frankfurt, 0.06% for the FTSE in London and 0.22% for the EuroStoxx 50.
The Paris market on Tuesday surpassed 7,100 points for the first time since February, and the broad European Stoxx 600 index hit nine-month highs, both posting a fifth straight session of gains.
Equity markets were supported by reports from Bloomberg that the prospect of the European Central Bank raising interest rates by up to 25 basis points was gaining traction among policymakers.
This data confirms the expectations of observers for a soft landing for the economy.
“The likelihood of a recession is lower than people expect,” Credit Suisse said, pointing to a slowing economy, rising corporate profits and persistent consumer spending.
Japan’s Nikkei index rose 2.5%, its best daily performance in two months, after the Bank of Japan announced it would continue monetary policy. This decision, contrary to analysts’ forecasts, leads to lower yen and Japanese bond yields.
“Inflation dynamics are gradually changing and the need to maintain the current ultra-loose monetary policy framework is waning,” said Masayuki Kichikawa, head of macroeconomic strategy at Sumitomo Mitsui Asset Management.
Major stock markets in China ended the session on weak trading volumes as the Lunar New Year holidays approached with little change: the CSI 300 lost 0.17% and the Shanghai SSE Composite ended flat.
ON WALL STREET
The New York Stock Exchange ended mixed on Tuesday, as lower-than-expected quarterly profit (-6.45%) published by Goldman Sachs weighed on the Dow Jones, while Tesla’s earnings led the Nasdaq to register a slight gain on the back of the start. allowed. earning season. [.NFR]
The Dow lost 1.14%, or 391.76 points, to 33,910.85, the S&P-500 lost 8.12 points, or 0.20%, to 3,990.97, and the Nasdaq Composite lost 15.96% (0.114 points). advancing (0.110.9 points).
Dow Jones sees streak in green snapped after four sessions. The Nasdaq ended higher for the seventh straight day, equaling a record high dating back to November 2021.
The bright spot on Wall Street came from Tesla, which rose 7.43% after the electric car maker reported a jump in Chinese sales on lower prices for its main models.
Morgan Stanley gained 5.91% after reporting quarterly earnings that beat expectations.
According to Refinitiv data, analysts now expect an annual decline of 2.4% for S&P-500 companies in the final quarter of 2022, compared with a previous decline of 1.6%.
The yen fell 1.74% to 130.36 against the dollar, reacting to the BoJ’s status quo. The currency hit a more than seven-month high on Monday on expectations of a change in the central bank’s monetary policy.
The dollar index, which measures the change of the dollar against a basket of major currencies, gained 0.07%, while the euro remained stable at $1.0808.
In the government bond market, the US ten-year bond fell below 3.5%, while its German equivalent was at 2.04%.
The oil market continues to be buoyed by optimism stemming from the lifting of health restrictions in top oil importer China.
A barrel of Brent oil increased by 0.9% to $86.69, while a barrel of American light oil (West Texas Intermediate, WTI) increased by 1.05% to $81.02.
(Editing by Kate Entringer)