Rebound seen in Europe pending Fed ‘protocols’ – 05/25/2022 at 08:35


MAJOR EUROPEAN STOCK EXCHANGE EXPECTED TO GROW

PARIS (Reuters) – Major European stock markets are expected to rise on Wednesday on hopes of a recovery on Wall Street, but they should recover only part of the ground lost a day earlier, fears of worsening growth prospects and its impact on corporate the results are not going to dissipate.

Index futures are up 0.87% for the CAC 40 in Paris, 0.67% for the Dax in Frankfurt, 0.62% for the FTSE 100 in London and 0.6% for the EuroStoxx 50.

The Paris market lost 1.66% on Tuesday and the broad European Stoxx 600 index shed 1.14% after the first results of the S&P Global PMI polls for May, which indicated a slowdown in growth and continued high inflationary pressures.

Wall Street, for its part, was hit by the announcement of a 16.6% drop in new home sales and warnings from Snap and Abercrombie & Fitch about their results. The news is seen as all the more worrisome as it comes in the context of a rapidly raising interest rates by the Federal Reserve, which is supposed to keep inflation down at the risk of triggering a recession in the economy.

As such, investors will be keeping a close eye on the release of the minutes of the Federal Reserve’s April meeting at 1800 GMT, as the debate over the advisability of raising rates by more than half a point in one or more of the following meetings is still ongoing. he did not decide.

In Europe, detailed data on German gross domestic product (GDP) in the first quarter show an increase of 0.2% compared to the previous three months and 3.8% year on year.

ON WALL STREET

The New York Stock Exchange ended Tuesday mixed, with only the Dow Jones closing in positive territory, as recession fears changed investor risk appetite.

The Dow added 0.15%, or 48.38 points, to 31,928.62, but the broader Standard & Poor’s 500 fell 32.27 points, or 0.81%, to 3,941.48, while the Nasdaq Composite fell. for its part, by 270.83 points (2.35%) to 11,264.45 points.

Aside from the day’s disappointing economic performance, investors were most concerned about Snap’s second quarter earnings alert, an announcement that sent stocks down 43.1% and a wave in the social media sector.

Meta Platforms, Alphabet, Twitter and Pinterest fell 5-24%, while the S&P-500 communications sector fell 3.7%.

So far, futures for the major indexes suggest gains of around 0.3% for the Dow Jones, 0.4% for the S&P 500 and 0.7% for the Nasdaq.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index fluctuated during the session, but ended up falling 0.26%.

In China, after a rocky start, the trend is clearly higher as hopes for further stimulus take over, with the Shanghai SSE Composite shedding as much as 0.3% to gain 1.02% and the CSI 300 up 0.44%.

EXCHANGE/COURSE

The dollar rose again against a basket of benchmark currencies (+0.13%) after falling to its lowest level in a month on Tuesday, helped by at least temporary stabilization of US Treasury yields.

They fell sharply in response to data on new home sales, with two-year stocks falling in the session to 2.464%, the lowest level since April 19, and ten-year shares to 2.718%, the lowest level since April 27. Both have since recovered to 2.502% and 2.7452%, respectively.

10-year German papers also rose slightly in early trading, by 0.96%.

The euro fell to $1.0693 (-0.38%) against Tuesday’s high of 1.0748, the best level since April 25.

The New Zealand dollar rose sharply (+0.53%) after a half-point hike to 2.0% in New Zealand’s central bank’s key rate, accompanied by comments that the rate could rise even more than previously expected. .

BUTTER

Oil prices are once again supported by speculation over a European embargo targeting Russian oil and the approach of the big US summer travel season, synonymous with fuel demand peaks.

The price of Brent crude rose 0.6% to $114.24 per barrel, while US light oil (West Texas Intermediate, WTI) rose 0.66% to $110.49.

(written by Marc Angrande)

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