Rise in sight in Europe, rain of results, hope in the Fed

Rise in sight in Europe, rain of results, hope in the Fed

Photo of a bus stop sign

Photo of a bus stop sign

by Claude Chendjou

PARIS (Reuters) – Major European stocks are expected to rise again on Tuesday, the day after their rally linked to falling bond yields amid lower expectations for medium-term rate hikes by the European Central Bank (ECB). ) and the United States Federal Reserve (Fed).

Index futures suggest a rise of 0.65% for the Paris CAC 40, 0.12% for the Frankfurt Dax, 0.11% for the London FTSE 100 and 0.26% for the EuroStoxx fifty.

Although there is no doubt that the ECB will raise rates by 75 basis points on Thursday before the Fed raises rates next week, investors are expecting the US central bank to start slowing the rate hike of credit in December and that the institution does the same next year.

The latest officials to urge the ECB to be cautious in raising interest rates, Portuguese Prime Minister Antonio Costa said on Monday that the inflation was mainly due to the shock caused by the war in Ukraine and not an increase in supply. money or household income. .

The very likely ascent of former British finance minister Rishi Sunak to the post of prime minister also supports improving market sentiment, averting the threat of a financial, economic and political crisis in the country, according to analysts.

The session of the day will also be animated by a host of results from companies, including those from Europe from Michelin, Air Liquide, Orange and SAP, and those from the United States from Alphabet, Microsoft, 3M and Coca-Cola, among others.

Of the 99 S&P-500 companies that reported earnings, 74.7% beat earnings expectations, compared with a long-term average of 66.2%, according to Refinitiv data.

On the economic indicators side, only the Ifo index of the business climate in Germany is on the agenda.

ON WALL STREET

The New York Stock Exchange closed higher on Monday on hopes that the Federal Reserve would begin to ease its stance on rate hikes in light of the latest macroeconomic indicators.

The Dow Jones Industrial Average gained 1.34%, or 417.06 points, to 31,499.62 points.

The broader S&P-500 gained 44.59 points, or 1.19%, to 3,797.34 points.

The Nasdaq Composite advanced 92.9 points (0.86%) to 10,952.61 points.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index ended up 1.02% at 27,250.28 points and the larger Topix rose 1.06% to 1,907.14 points.

In China, the Shanghai SSE Composite fell 0.02% and the CSI 300 fell 0.22%, affected by fears of a political hardening in Beijing with Xi Jinping’s tightening control over the Chinese Communist Party.

The MSCI Asia-Pacific Index fell to 427.4 points on Tuesday, the lowest level since April 2020.

SPEED

In Asian markets, the 10-year US Treasury yield is holding steady at 4.20% as 49 of 80 economists polled by Reuters expect rates to peak in the US. at 4.50%-4.75% in the first quarter of 2023.

In Europe, the ten-year German Bund, which lost more than nine basis points on Monday, appeared on Tuesday at 2.27%, 7.1 points less.

CHANGES

The dollar stopped (-0.04%) against other major currencies.

The euro, with a fall of 0.03%, is trading at 0.9871 dollars.

Sterling, which benefited from British Conservative Party announcements on Monday, rose 0.04% to $1.1288.

The Japanese currency is trading at 148.9 yen to the dollar as traders speculate on possible interventions from Tokyo.

The Chinese “offshore” yuan meanwhile fell to a new low against the dollar at 7.3650 per dollar.

OIL

Oil prices rose slightly on the back of the dollar break, but gains are capped by fears of falling Chinese demand, given the latest economic statistics released by the country.

Brent rose 0.17% to $93.42 a barrel and US light crude (West Texas Intermediate, WTI) rose 0.22% to $84.77.

(Written by Claude Chendjou, edited by Kate Entranger)

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