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

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THE MAJOR EUROPEAN STOCK EXCHANGES ARE EXPECTED TO FALL

by Marc Angrand

PARIS (Reuters) – The main European stock markets are expected to fall on Wednesday after Wall Street closed in the red, as the latest US inflation figures were not enough to permanently dispel fears linked to the tightening of US monetary policy. .

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

The monthly US consumer price data released on Tuesday brought brief relief to markets in the absence of any nasty surprises, with core inflation data even suggesting a deceleration. But clearly more is needed to fully reassure investors of the Federal Reserve’s intentions.

Especially since some Fed officials continue to plead for a rapid rate hike, like James Bullard, the president of the regional branch of St. Louis: in an interview with the Financial Times, he explains that the consumer price statistics point out that “the Fed is lagging behind and needs to act.”

The day’s session will be animated among other things by 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 by the policy decision of the Bank of Canada, which could be the first central bank of the G7 to raise its main interest rate by half a point.

Economic indicators from Asia are also hardly encouraging: in China, the monthly foreign trade statistics show a 1.7% drop over one year in imports measured in yuan and in Japan, orders for industrial equipment fell 9.8% in February from January, their biggest month-on-month decline in nearly two years.

AT WALL STREET

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

The Dow Jones index 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 trend reversal was helped by statements by Fed Governor Lael Brainard, who stressed the need for the central bank to fight inflation “promptly”.

Futures so far suggest an open up around 0.5%.

IN ASIA

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

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

RATE

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

CHANGES

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

The dollar is practically unchanged against a basket of reference currencies (+0.04%).

Also note the rise of the New Zealand dollar (+0.42%) after the rate hike of half a point decided by the central bank of New Zealand, the largest since 2000.

OIL

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

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

(Written by Marc Angrand)

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