Recession in sight in Europe, concerns about inflation and the Fed persist – 04/13/2022 at 07:42


MAJOR EUROPEAN STOCK EXCHANGES ARE EXPECTED TO DECLINE

by Marc Angrand

PARIS (Reuters) – Major European stocks are expected to fall on Wednesday after Wall Street closed in the red, as the latest U.S. inflation figures were not enough to permanently allay fears linked to tightening US monetary policy.

Index futures suggest a drop of 0.21% for the Frankfurt Dax, 0.19% for the London FTSE 100 and 0.16% for the EuroStoxx 50. As for the Paris CAC 40, it could open practically unchanged according to the first indications available.

Monthly US consumer price data released on Tuesday provided brief relief to markets in the absence of any unpleasant surprises, with core inflation data even suggesting a slowdown. But clearly more is needed to fully reassure investors about the Fed’s intentions.

Especially since some Fed officials continue to advocate a rapid rate hike, such as James Bullard, president of the St. Louis regional branch: in an interview with the Financial Times, he explains that consumer price statistics indicate that ” The Fed is falling behind and needs to act.”

The day’s session will be animated among other things by the inflation figures in the United Kingdom, expected at 06:00 GMT, by those of producer prices in the United States, at 12:30 GMT, then at 14:00 GMT for the policy decision. from the Bank of Canada, which could be the first G7 central bank to raise its main interest rate by half a point.

Asia’s economic indicators are also bleak: in China, monthly foreign trade statistics show a 1.7% year-on-year drop in imports measured in yuan, and in Japan, industrial equipment orders fell 9.8%. % in February from January, its biggest month. month-on-month decline in almost two years.

A WALL STREET

The New York Stock Exchange closed lower on Tuesday after erasing its early trading gains, as the prospect of a Federal Reserve tightening of monetary policy next month weighed again on growth stocks and supported bondholders’ returns.

The Dow Jones Industrial Average fell 0.26%, or 87.72 points, to 34,220.36, the Standard & Poor’s 500 lost 15.08 points, or 0.34%, to 4,397.45 and the Nasdaq Composite lost fell 40.38 points (-0.30%) to 13,371.57.

The turnaround was helped by comments from Fed Governor Lael Brainard, who stressed the need for the central bank to fight inflation “quickly”.

Futures so far suggest an open of around 0.5%.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index gained 1.61% less than an hour after closing and thus moved away from the lowest point of almost a month reached on Tuesday after a fall considered excessive by some investors.

In China, the Shanghai SSE Composite lost 0.28% and the CSI 300 lost 0.31%, as markets continued to question the nature of the credit support measures and the activity that the authorities should announce in the coming hours or days. .

VELOCITY

US bond yields, which had fallen sharply on Tuesday after the consumer price figures, rose again in early trading: the two-year, the most sensitive to interest rate expectations, resumed a little over two basis points at 2.4056% and the ten-year is up at 2.7481%.

CHANGES

The euro continues to be penalized by fears over the impact of the war in Ukraine: it returned to its lowest level since March 7 against the dollar at 1.0813 before rising to 1.0829 at the start of the day. However, its fluctuations could remain limited on the eve of the decisions of the European Central Bank (ECB).

The dollar remains practically unchanged against a basket of benchmark currencies (+0.04%).

Also noteworthy is the rise in the New Zealand dollar (+0.42%) after the half-point rate hike decided by the New Zealand central bank, the highest since 2000.

PETROLEUM

The price of a barrel of oil, which rose to more than a dollar at the beginning of the session, is now showing a slight downward trend, a sign that the market remains torn between the prospect of supply tensions in the event of an embargo. on Russian crude and on demand concerns related to health restrictions in China.

Brent fell 0.11% to $104.52 a barrel and US light crude (West Texas Intermediate, WTI) fell 0.27% to $100.33.

(Written by Marc Angrand)

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