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Rebound in sight in Europe while waiting for the “minutes” of the Fed

Rebound in sight in Europe while waiting for the “minutes” of the Fed
Written by madishthestylebar

MAJOR EUROPEAN STOCK EXCHANGES EXPECTED TO UP

PARIS (Reuters) – The main European stock markets are expected to rise on Wednesday on the hope of a rebound on Wall Street but they should only regain part of the ground lost the day before, concerns linked to the deterioration in the outlook for growth and its impact on corporate results is not about to dissipate.

Futures contracts on indices suggest an increase of 0.87% for the CAC 40 in Paris, 0.67% for the Dax in Frankfurt, 0.62% for the FTSE 100 in London and 0.6% for the EuroStoxx 50.

The Parisian market lost 1.66% on Tuesday and the broad European Stoxx 600 index 1.14% after the first results of the S&P Global PMI surveys for May, which suggested slowing growth and continued high inflationary pressures.

Wall Street suffered for its part from the announcement of a 16.6% drop in new home sales and warnings from Snap and Abercrombie & Fitch on their results. News considered all the more worrying as it comes in the context of the rapid rise in interest rates by the Federal Reserve, which is supposed to curb inflation at the risk of precipitating the economy into recession.

Investors will therefore be watching with particular attention the publication of the minutes of the Federal Reserve’s April meeting at 18:00 GMT, as the debate on the advisability of rate hikes of more than half a point during one or more of the next meetings is still undecided.

In Europe, detailed figures for German gross domestic product (GDP) in the first quarter show growth of 0.2% compared to the previous three months and 3.8% year on year.

IN WALL STREET

The New York Stock Exchange ended in mixed order on Tuesday, with only the Dow Jones ending higher, as fears of recession have altered investors’ appetite for risk.

The Dow gained 0.15%, or 48.38 points, to 31,928.62 but the broader Standard & Poor’s 500 fell 32.27 points, or 0.81%, to 3,941.48 and the Nasdaq Composite fell for its part by 270.83 points (2.35%) to 11,264.45 points.

Beyond the day’s disappointing economic indicators, investors were most concerned about Snap’s second-quarter earnings warning, an announcement that sent the stock plummeting 43.1% and rippled across the social media sector.

Meta Platforms, Alphabet, Twitter and Pinterest fell between 5% and 24%, while the S&P-500 communications sector declined 3.7%.

Futures on major indices so far suggest an open up of around 0.3% for the Dow Jones, 0.4% for the S&P 500 and 0.7% for the Nasdaq.

IN ASIA

At the Tokyo Stock Exchange, the Nikkei index had a hesitant session but ended down 0.26%.

In China, after a rocky start, the trend has clearly turned higher as hopes for further stimulus regain the upper hand: the Shanghai SSE Composite, after losing as much as 0.3%, takes 1.02% and the CSI 300 advances by 0.44%.

EXCHANGES/RATES

The dollar rose again against a basket of benchmark currencies (+0.13%) after falling to its lowest level in a month on Tuesday, a rebound helped by the at least temporary stabilization of Treasury bond yields American.

These had fallen sharply in response to new home sales figures: the two-year fell in session to 2.464%, the lowest since April 19, and the ten-year to 2.718%, the lowest since April 27. . Both have since recovered, to 2.502% and 2.7452% respectively.

The ten-year German is also up slightly in early trading, at 0.96%.

The euro fell to 1.0693 dollars (-0.38%) against 1.0748 at its highest on Tuesday, its best level since April 25.

The New Zealand dollar is up sharply (+0.53%) after the increase by half a point, to 2.0%, of the key rate of the central bank of New Zealand, accompanied by comments suggesting that this rate could rise even more than previously expected.

OIL

The price of oil is supported once again by speculation on a European embargo targeting Russian crude and by the approach of the season of major summer travel in the United States, synonymous with peaks in fuel demand.

Brent gained 0.6% to 114.24 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.66% to 110.49 dollars.

(Written by Marc Angrand)

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