Setback in sight in Europe before Powell's great oral

Setback in sight in Europe before Powell’s great oral

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SETBACK IN VIEW IN EUROPE BEFORE JEROME POWELL’S GRAND ORAL

by Laetitia Volga

PARIS (Reuters) – The main European stock markets are expected to fall again on Wednesday, as well as Wall Street, due to concerns about economic growth and inflation a few hours before the highly anticipated intervention by Jerome Powell, the president of the Federal Reserve (Fed), in Congress in Washington.

Futures contracts show a decline of 1.67% for the Paris CAC 40, 1.55% for the Dax in Frankfurt, 1.18% for the FTSE in London and 1.64% for the EuroStoxx 50 .

The broad European Stoxx 600 index has recovered 1.32% since Monday after three consecutive weeks of decline marked by concerns about inflation, the raising of interest rates by major central banks and the evolution of the economy.

The impact of the war in Ukraine and the tensions on the raw materials markets should weigh on French growth, estimates the Banque de France, which lowered its forecasts for gross domestic product in 2022 and 2023.

Main meeting of the session, Jerome Powell will speak from 1:30 p.m. GMT before the Senate Banking Committee, before a similar hearing before the House of Representatives on Thursday.

“He will likely be faced with questions about how far the Fed is willing to go in controlling inflation, i.e. how big the rate hike, (…) and whether the The Fed is prepared to let unemployment rise sharply to achieve this goal,” said Michael Hewson at CMC Markets.

AT WALL STREET

Wall Street futures are signaling a decline of about 0.9% after the New York Stock Exchange’s positive session on Tuesday, supported by cheap buybacks on large-cap stocks and those in the energy sector. . [.NFR]

The Dow Jones index gained 2.15% to 30,530.25 points, the S&P-500 gained 2.45% to 3,764.84 points and the Nasdaq Composite advanced 2.51% to 11,069.30 points.

IN ASIA

The Nikkei on the Tokyo Stock Exchange lost 0.37%, in the wake of American “futures”.

Fears linked to central bank policies and the economic situation are also affecting stock markets in China, where the Shanghai SSE Composite index lost 0.52% and the CSI 300 0.63%.

OIL

The oil market is down as the US president is expected to plead on Wednesday for a temporary suspension of the federal gasoline tax of 18.4 cents per gallon, and at the same time increases the pressure on the giants of the sector which he considers partly responsible for the surge in crude oil prices.

The White House has invited executives from seven refiners and oil companies to a meeting Thursday to discuss ways to increase production capacity and lower energy prices.

Brent lost 3.86% to 110.23 dollars a barrel and US light crude (West Texas Intermediate, WTI) 4.18% to 104.94 dollars.

CHANGES

The greenback is up 0.28% against a basket of benchmark currencies, including the euro, down to $1.0503,

The pound widened its losses slightly against the dollar and the euro in reaction to British inflation accelerating to 9.1% year on year in May, the most in 40 years.

The yen is recovering (+0.12%) after having fallen to its lowest level since 1998 against the dollar, the Japanese currency remaining penalized by the divergence of the monetary policies of the Bank of Japan and the Fed.

RATE

The renewed risk aversion is accompanied by a drop in bond yields: the ten-year yields more than six basis points to 3.2371% and in early trading, the German ten-year fell to 1.724%.

(Writing by Laetitia Volga, editing by Kate Entringer)

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