Market update – Slowdown in Europe ahead of new decisions by central banks
Wall Street ended lower on Wednesday
The Fed raised rates by half a point as expected
Powell said rates will remain high for a long time
To follow the USA retail sales figures
The further deterioration of China’s economy
by Claude Chendjou
PARIS, Dec 14 (Reuters) – Major European stock markets are expected to fall on Thursday as investors are likely to remain cautious ahead of monetary policy announcements in the euro zone and UK and after remarks by the President of the American Federal Reserve (Fed) considered it premature to mention a reduction in interest rates.
According to the first indications available, the Dax Frankfurt should lose 0.41% at the opening, the FTSE 100 London 0.14% and the EuroStoxx 50 index 0.48%.
The Fed on Wednesday announced a half-point increase in its key interest rate and shared new economic expectations that would indicate at least a further rate hike of 75 basis points in 2023 and very limited rate growth. American economy.
Comments by Jerome Powell, the Fed Chairman, at the conference following the announcements were seen as not only tough but also raised fears of a recession, causing a more marked inversion of the yield curve. interest rate yields between short-term and long-term bonds.
“This is a very ‘hawkish’ message from the Fed: a terminal rate significantly higher than in September with also a real risk of a hike,” TD Securities analysts wrote in a note, referring to the Fed’s projection . of a rate peak above 5%, a level not seen since the Great Recession of 2007.
Increases of 50 basis points in interest rates from the European Central Bank (ECB), Bank of England (BoE) and Swiss National Bank (SNB) are also expected on Thursday.
In terms of economic statistics, investors will learn at 12:30 pm monthly data on retail sales in the United States. The Reuters consensus was calling for a contraction of 0.1% month-on-month after a 1.3% gain in October.
In China, retail sales fell 5.9% in November, the sharpest contraction since May, while industrial production slowed 2.2% year-on-year and real estate investment fell 19.9%, a low of more than 20 years.
PRICES TO FOLLOW IN EUROPE:
Hennes & Mauritz (H&M) is set to publish its fourth quarter sales.
ON WALL STREET
The New York Stock Exchange ended lower on Wednesday, after a volatile session, after the Fed decided to raise interest rates by 50 basis points, as expected, but said it expected the higher rates for longer durations.
The Dow Jones index fell 0.42%, or 142.29 points, to 33,966.35 points.
The broader S&P-500 lost 24.33 points, or 0.61%, to 3,995.32 points.
The Nasdaq Composite fell from 85.93 points (0.76%) to 11,170.89 points.
On the Tokyo Stock Exchange, the Nikkei index fell 0.37% to 28,051.7 points and the broader Topix fell 0.18% to 1,973.9 points, hampered by concerns over future projections.
In China, the Shanghai SSE Composite fell 0.14% and the CSI 300 fell 0.03% after data showing further deterioration in the economy.
In the foreign exchange in Asia, the yield on the ten-year American bond fell to 3.49% and on the two-year to 4.24%, while the “spread” between the two maturities decreased -75.2 points, an inversion that indicated a recession in horizon. short term.
In Europe, the yield on the ten-year German Bund ended at 1.93%, supported by information from Reuters that forecasts presented on Thursday by the ECB will include inflation above 2% in 2025.
The prospect of higher rates in the United States in the long term supported the dollar, which rose 0.17% against a basket of benchmark currencies.
The euro retreated to 1.0655 dollars (-0.25%) and the pound fell 0.22% to 1.2394 dollars ahead of the ECB and BoE decisions.
Oil prices are on a downward trend on Asian exchanges with a strong dollar, while the prospect of continued monetary tightening by central banks raises fears about demand.
Brent lost 0.71% to 82.11 dollars a barrel and American light crude (West Texas Intermediate, WTI) 0.88% to 76.60 dollars.
MAIN ECONOMIC INDICATORS DECEMBER 15 AGENDA: COUNTRY GMT INDICATOR PERIOD DATE AGREEMENT FR 07:45 Insee climate index for December 100 to 101
business USA 1:30 pm Empire activity index December -1.00 4.50
States” USA 1:30 pm Registrations for weekly unemployment at 230,000 230,000
10/12 USA 1:30 pm Philly activity index December -10.0 -19.4
Fed” USA 1:30 pm November retail sales -0.1% +1.3%
– excluding vehicles +0.2% +1.3% USA 2:15 pm Industrial production November +0.1% -0.1%
THE MARKET SITUATION:
(Some data may show slight differences) (Written by Claude Chendjou, edited by Matthieu Protard)