MARKET POINT: New rise in sight in Europe despite doubts

MARKET POINT: New rise in sight in Europe despite doubts

Traders on the New York Stock Exchange (NYSE)

Traders on the New York Stock Exchange (NYSE)

PARIS (Reuters) – Major European stocks are expected to rally on Friday after Wall Street’s dramatic turnaround, as investors have clearly chosen to look beyond stronger-than-expected inflation in the United States and its consequences for the future. rise in interest rates.

Index futures contracts point to a rise of 1.87% for the Frankfurt Dax, 0.93% for the London FTSE 100 and 1.84% for the EuroStoxx 50. As for the Paris CAC 40 , could take more than 1.7% according to the first indications available.

All have already closed this Thursday in green despite the announcement of a rise of 0.4%, more pronounced than expected, in the US consumer price index (CPI) in September and the acceleration of core inflation (without energy or food) in 6.6%. more than a year.

However, these statistics have raised interest rate expectations less than three weeks before the Federal Reserve meeting: markets now estimate the probability of a three-quarter percentage point rise next month at 86.6%. and by 13.4% that of an even more marked rise, of 100 basis points, according to the real-time barometer FedWatch.

And the scenario of a new rise of 75 basis points in December has also been reinforced, as well as that of a rate peak of 5%.

As for equities, Wall Street seems capable of prolonging its rebound for the time being, the duration of which will largely depend on the tone of earnings releases, which will multiply in the coming weeks.

In Europe, for the foreseeable future, investors are mainly waiting to know whether the Bank of England will indeed stop its bond purchases this Friday and whether the Liz Truss government will modify its budget plans.

According to various sources, the British Treasury Minister has interrupted his stay in the United States on the occasion of the meeting of the International Monetary Fund (IMF).

The upcoming session will also be buoyed by US Retail Sales figures at 12:30 GMT, and then by the first estimate of the Michigan Confidence Index.

ON WALL STREET

The New York Stock Exchange closed sharply higher on Thursday, making the most of the proximity of technical support and hedging after falling sharply earlier in the session in reaction to consumer price data.

The Dow Jones Industrial Average jumped 2.83%, or 827.87 points, to 30,038.72, the Standard & Poor’s 500 gained 92.88 points, or 2.60%, to 3,669.91 and the Nasdaq Composite rose 232 .05 points (+2.23%) to 10,649.15.

The S&P 500 gained nearly 194 points in total from the morning low to the afternoon high, its biggest single-session move since Jan. 24. Some strategists explain this reversal by approaching support around 3,500 points.

The rise benefited all sectors, but the most spectacular gains were for energy (+4.08%) and financials (+4.14%).

Futures contracts point to a further rise for now with gains of around 0.6%.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index gained 3.3% less than an hour after closing and is on track for its best daily performance since March after four straight sessions down.

In addition to the boost given by Wall Street, it benefits from the good results of Fast Retailing, Uniqlo’s parent company, which jumped 8.1%.

In China, the Shanghai SSE Composite took 1.83% and the CSI 300 2.39% for this last session prior to the opening of the 20th Congress of the Communist Party, benefiting from statements by the Governor of the People’s Bank of China promising strengthening support for the real economy. .

SPEED

US government bond yields fell a bit in Asia as the market seemed to catch its breath after hitting new highs on Thursday in reaction to inflation data.

The ten-year appears at 3.9443% after rising to 4.08% in Thursday’s session, its highest level since October 2008, and the two-year returns to 4.4452% after reaching 4.464%, a maximum of 15 years.

CHANGES

The dollar is broadly flat against other majors (+0.02%) after falling 0.5% on Thursday as renewed risk appetite steered traders away from safe havens.

The euro is trading at 0.9775 dollars, 0.02% more.

The pound is down 0.13% against the dollar after rising 2% on Thursday in reaction to British media reports that Liz Truss’s government plans to forgo at least part of the tax and tariff relief announced on Thursday. last month.

OIL

The oil market has been kept out of the burst of euphoria that is benefiting equities, and remains largely unchanged, depending on dollar fluctuations, recession fears and questions about the relationship between the United States and Saudi Arabia.

Brent rose 0.13% to $94.69 a barrel and US light crude (West Texas Intermediate, WTI) rose 0.17% to $89.26.

Both are now showing a drop of around 3% from the start of the week, after two weeks of gains.

(Written by Marc Angrand, edited by Matthieu Protard)

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