Wall Street downturn should affect European stock markets – 05/12/2022, 08:18


Wall Street downturn should affect European markets

Letitia Volga

PARIS (Reuters) – Major European stock markets were expected to open Thursday following Wall Street, where still-strong US inflation did not reassure investors about the Federal Reserve’s monetary tightening.

The first available indicators show a decline of 2.24% for the CAC 40 in Paris and Dax in Frankfurt, 1.44% for the FTSE in London and 2.46% for the EuroStoxx 50.

European stock markets closed higher on Wednesday after fluctuations, but a negative close on Wall Street should force investors to reconsider their interpretation of US inflation figures.

US consumer price growth certainly slowed down last month, but not as much as expected, and their annual increase remains strong at 8.3%. The “core consumer price index”, which excludes energy and food, even accelerated, climbing 0.6% on the month after +0.3% in March.

These conflicting data should not allow the Fed to revise downward the pace of ongoing monetary tightening, analysts say.

“Now we are on track for at least two rate hikes of 50 basis points. For the stock markets, this is really the end of free money,” said Damian Rooney of brokerage Argonaut.

The release of US producer price data at 1230 GMT should also spark debate over US monetary policy.

VALUES TO FOLLOW:

ON WALL STREET

On the New York Stock Exchange, the Dow Jones fell 1.02% to 31,834.11 on Wednesday, the S&P-500 lost 1.65% to 3,935.18 and the Nasdaq Composite fell 3.18% to 11. 364.24 points.

The S&P-500 is down 18% since the January 3 close. Dow Jones recorded the fifth session in a row in the red, which is an unprecedented series since mid-February.

Apple shares fell 5.2%, Nasdaq shares and S&P-500 shares fell. It is giving way to the world’s first market capitalization to oil giant Saudi Aramco, which has benefited from rising oil prices to record a capitalization of around $2.426 billion, while Apple stands at $2.371 billion.

Futures contracts suggest a stable opening for Wall Street for now.

IN ASIA

Following Wall Street, the Nikkei yield in Tokyo is 1.4%.

Shares in automaker Toyota shed 0.65% after it said it expects its full-year earnings to fall due to a sharp rise in commodity prices.

In China, the Shanghai Stock Exchange Composite Index rose 0.14%, while the large-cap CSI 300 was flat at -0.05%.

INDICATOR

The 10-year Treasury yield fell slightly to 2.8913% after hitting a two-week low earlier at 2.862%.

Thus, the fourth consecutive session of decline continues, which may indicate that investors are “less worried about inflation than the slowdown in the economy as a whole,” said Michael Hewson of CMC Markets.

CHANGES

The dollar index, which measures banknote fluctuations against a basket of currencies, rose 0.19%, close to a 20-year high, following inflation data from the United States.

The euro changes little against the US dollar, at $1.051.

BUTTER

Oil prices are falling again due to economic fears and fears of a recession.

Brent lost 1.4% to $106 a barrel, while US light crude (West Texas Intermediate, WTI) fell 1.49% to $104.13.

(Written by Letitia Volga, edited by XX)

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