Wall Street’s downturn should weigh on stock markets in Europe – 05/12/2022 at 08:18


WALL STREET’S DOWNTURN SHOULD WEIGHT MARKETS IN EUROPE

by Laetitia Volga

PARIS (Reuters) – The main European stock markets are expected to fall on Thursday at the opening in the wake of Wall Street where the still high figures for US inflation did not reassure investors about the monetary tightening of the Federal Reserve.

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

European stock markets, after hesitating, ended in the green on Wednesday but the negative close on Wall Street should lead investors to reconsider their interpretations of inflation figures in the United States.

The rise in consumer prices in the United States certainly slowed down last month, but not as much as expected and their annual rise remains high at 8.3%. The “core CPI” index, which excludes energy and food, even accelerated with a rise of 0.6% over one month after +0.3% in March.

These contrasting data should not allow the Federal Reserve to revise downwards the pace of the ongoing tightening of its monetary policy, analysts believe.

“We’re now well on our way to at least two 50 basis point rate hikes. For equity markets, it’s really the end of free money,” said Damian Rooney at brokerage Argonaut.

The publication at 12:30 GMT of producer prices in the United States should also fuel the debate around American monetary policy.

VALUES TO FOLLOW:

AT WALL STREET

On the New York Stock Exchange, the Dow Jones index fell 1.02% to 31,834.11 points on Wednesday, the S&P-500 lost 1.65% to 3,935.18 points and the Nasdaq Composite fell 3, 18% to 11,364.24 points.

The S&P-500 is now down 18% from its closing record on January 3. The Dow Jones recorded its fifth consecutive session in the red, an unprecedented series since mid-February.

Apple stock fell 5.2%, the top contributor to the Nasdaq and S&P-500 declines. It cedes the place of first market capitalization in the world to Saudi Aramco, the oil giant, which benefited from the surge in crude prices, posting a capitalization of approximately 2.426 billion dollars and Apple of 2.371 billion.

Futures contracts suggest a stable open on Wall Street for now.

IN ASIA

In the wake of Wall Street, the Nikkei yields 1.4% in Tokyo.

In stocks, automaker Toyota lost 0.65% after saying it expected a decline in its annual profit due to soaring raw material costs.

In China, the Shanghai Stock Exchange composite index advanced 0.14% and the large cap CSI 300 was little changed at -0.05%.

RATE

The yield on ten-year Treasuries fell slightly to 2.8913% after hitting a two-week low earlier at 2.862%.

It thus continues its fourth consecutive session of decline, which could indicate that investors “are less worried about inflation than a slowdown in the economy in general,” said Michael Hewson at CMC Markets.

CHANGES

The dollar index, which measures the variations of the note against a basket of currencies, gained 0.19%, close to a 20-year peak, after the inflation figures in the United States.

The euro is changing little against the greenback, at 1.051 dollars.

OIL

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

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

(Written by Laetitia Volga, edited by XX)

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