European stocks expected to fall ahead of service SMEs – 05/10/2022 at 07:54


Bourse is visible on a panel near the Palais Brongniart

by Claude Chendjou

PARIS (Reuters) – Major European stock exchanges are expected to fall on Wednesday on profit-taking after the sharp rally yesterday linked to hopes of a slowdown in rate hikes by major central banks as services PMI indices need to be released .

According to the first indications available, the Frankfurt Dax, which gained 3.78% on Tuesday, is expected to lose 0.43% on Wednesday at the opening. London’s FTSE 100, which closed up 2.59% yesterday, is expected to fall 0.37%. The EuroStoxx 50 index is expected to drop 0.35% after jumping 4.2% on Tuesday.

Equity markets are expected to fall again as deteriorating manufacturing activity in Europe and the US in September fueled speculation since Monday about the end of the sharp rise in interest rates. Investors then assumed that the latest economic indicators showed that the rise in the cost of credit was starting to have its effects by holding back demand. This scenario was further reinforced by the lower-than-expected rate hike from the Australian central bank on Tuesday.

On Wednesday, New Zealand’s central bank raised its key rate by 50 basis points to 3.5% and indicated that a 75 basis point hike was being considered, a sign that inflation remains a concern, despite the risk of global recession.

Investors will closely follow monthly S&P Global Services Index data in Europe and the US on Wednesday, while a private US employment survey by firm ADP is also expected ahead of the American Department of Labor report. .

The day before, a report on job vacancies (“JOLTS”) showed that in August they had fallen to their lowest level in nearly two and a half years, a sign of a deteriorating job market.

The French state presented a takeover bid on Tuesday at the price of 12 euros per share on the balance of the capital of EDF that it does not yet hold and which should go from 10 November to 8 December.

A WALL STREET

The New York Stock Exchange continued on Tuesday its strong rebound that began the day before, fueled by big tech stocks, the first beneficiaries of falling bond yields in hopes that the Federal Reserve will become less aggressive in terms of rate hikes. ‘interest.

The Dow Jones Industrial Average gained 2.8%, or 825.43 points, to 30,316.32 points.

The broader S & P-500 rose 112.5 points, or 3.06%, to 3,790.93 points, its largest gain since May 2020.

The Nasdaq Composite, with a strong technological component, for its part advanced by 360.97 points (3.34%) to 11,176.41 points.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index advanced 0.53% to 27,136.33 points and the broader Topix picked up 0.34% to 1,913.3 points as the close approached.

In China, on the other hand, Shanghai’s SSE Composite drops 0.55% and CSI 300 drops 0.58%.

RATE IT

The 10-year US Treasury bond yield, which hit a two-week low on Tuesday after already falling more than 20 points on Monday, climbed again Wednesday to 3.625% versus 3.617% the day before.

That of the German Bund of the same maturity closed on Tuesday at 1.88% after falling in session to 1.77%, the lowest since September 19.

CHANGES

The dollar also recovered (+ 0.2%) against a basket of benchmark currencies, including the euro, which lost 0.12% to $ 0.9971.

The pound, down 0.24%, is trading at $ 1.1449, after benefiting for two sessions from the abandonment of the UK’s high-end income tax abolition project.

The yen is almost stable (+ 0.02%) against the dollar at 144.06.

OIL

Oil prices, rising sharply on Tuesday, are stable as OPEC + is expected to hold a meeting on Wednesday where a two million barrels per day (bpd) cartel production cut could be decided.

Brent fell 0.15% to $ 91.66 a barrel and US light crude (West Texas Intermediate, WTI) 0.23% to $ 86.32 a barrel.

(Written by Claude Chendjou, edited by Nicolas Delame)

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