Europe in the red before the ECB, rebound expected on Wall Street

Europe in the red before the ECB, rebound expected on Wall Street

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EUROPEAN STOCK MARKETS FALL AT MID-SESSION

by Claude Chendjou

PARIS (Reuters) – Wall Street is expected to rise on Thursday as European stocks trade in the red mid-session ahead of a meeting of the European Central Bank (ECB) which could give investors more indications on the start of its monetary tightening expected in July.

New York index futures are signaling an opening on Wall Street up 0.5% for the Dow Jones and Standard & Poor’s 500, while the Nasdaq could gain 0.6%.

In Paris, the CAC 40 fell 0.09% to 6,442.83 points around 11:25 GMT. In Frankfurt, the Dax lost 0.45% and in London, the FTSE lost 0.39%.

The pan-European FTSEurofirst 300 index fell by 0.38%, the EuroStoxx 50 of the euro zone by 0.2% and the Stoxx 600 by 0.37%.

Faced with record inflation, the European Central Bank (ECB) should confirm on Thursday the end of its bond purchase program on the markets this month and the raising of its rates in July, a prelude to a cycle of increases which should enable the institution to bring the cost of credit back into positive territory by the end of September.

Uncertainties remain, however, about the extent of the first increase, which could peak at half a point according to some analysts, while the ECB is launching a monetary tightening belatedly, compared to the other major central banks.

Money markets on Thursday expect rate increases of 135 basis points by the end of the year and 75 points by September. The ECB’s press release will be published at 11:45 GMT and will be followed 45 minutes later by a press conference by Christine Lagarde, the institution’s president.

In the United States, where inflation is also a concern, the monthly consumer price figures will be published on Friday and should also provide a little more insight into the trajectory of the Reserve’s monetary tightening American federal government, which meets on June 14 and 15.

VALUES IN EUROPE

In Europe, the negative trend is dominated by the real estate compartment (-1.3%) in a context of anticipation of rate hikes, while on the other side of the spectrum, energy (+0.3 %) is still rising in the wake of the recent surge in oil prices.

TotalEnergies advanced 0.3% after Credit Suisse raised its recommendation on the value to “outperform” while the sector index of oil and gas reached a peak of three and a half years.

EDF jumped 6.1% in response to information from Les Echos that nationalizing the group is among the priorities of the new government after the legislative elections in France.

Kering (-0.4%) is in the red after presenting its medium-term ambitions to investors, with some analysts awaiting further details on the Gucci brand, which has suffered more than its competitors from health restrictions in China. luxury is also penalized by the announcement Thursday of new containment measures in certain districts of Shanghai.

Richemont and LVMH respectively sell 1.4% and 0.8%.

Elsewhere in Europe, Beiersdorf, the manufacturer of Nivea cream, jumped 6.5% after the presentation of its medium-term objectives, while British American Tobacco fell 1.3%, the group having announced that it was still working on the transfer of its activities in Russia.

Credit Suisse, which issued a profit warning on Wednesday, lost 1.3% due to doubts about a rumored planned acquisition of the Swiss bank by State Street.

RATE

Bond yields in Europe vary shortly before the ECB meeting: that of the ten-year German Bund appears at 1.356% after briefly touching a peak of almost eight years at 1.373%.

In the United States, the yield on ten-year Treasuries remains above the symbolic threshold of 3%, at 3.0197%.

CHANGES

The euro remains at a seven and a half year high against the yen, at 142.76, reflecting the differences in monetary policies expected between the ECB and the Bank of Japan.

Against the dollar, the single European currency is stable at 1.0716.

The index measuring the fluctuations of the greenback against other major currencies, meanwhile, fell by 0.14%.

OIL

Oil prices remain near their three-month high despite the announcement of new health restrictions in parts of Shanghai. The larger-than-expected rise in Chinese exports in May, however, offers some support for the oil market.

Brent fell 0.05% to 123.46 dollars a barrel and US light crude (West Texas Intermediate, WTI) fell 0.16% to 121.92 dollars.

(Written by Claude Chendjou, edited by)

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