Business

Europe ends in red once more, Fed nervousness ignites – 09/20/2022 at 22:47


Chart of the DAX German inventory value index on the Frankfurt Stock Exchange

By Claude Chendjou

PARIS (Reuters) – European shares ended decrease on Tuesday as fairness market nervousness dominated the beginning of the U.S. Federal Reserve’s (Fed) two-day financial coverage assembly and Wall Street additionally traded in the red mid-session, regardless of fears of a slowdown that can finish with a pointy rate of interest hike on Wednesday. is anticipated

In Paris, the CAC 40 ended down 1.35% at 5,979.47 factors. German DAX fell 1.03%. Britain’s footy fell 0.61% after a 3-day shutdown linked to Queen Elizabeth’s funeral.

The EuroStoxx 50 index fell 0.93%, the FTSEurofirst 300 1.02% and the Stoxx 600 1.09%.

Awaiting a choice from the Fed’s Federal Open Market Committee (FOMC) did little to encourage threat-taking in Europe, the place the Stoxx 600 volatility index ended up 3.7% at 27.15 factors, whereas its US counterpart rose 3.14% to 26.57, a report final week. Closer to the 2 month most.

“Traders are very cautious forward of tomorrow’s Fed announcement,” mentioned Peter Cardillo, chief economist at Spartan Capital Securities.

With one other Fed charge hike of 75 foundation factors now not debated, buyers will focus, in line with Peter Cardillo, on whether or not a hike of this magnitude will now be the norm for future central financial institution conferences. american

Sweden’s central financial institution shocked on Tuesday by saying a 100-level hike in its key rate of interest to 1.75% and warning that it plans to tighten financial coverage to deal with inflation.

Monetary coverage selections by the Bank of England (BoE), Bank of Japan (BoJ) and Swiss National Bank (SNB) will probably be introduced on Thursday. Switzerland additionally sharply lower its progress forecast on Tuesday, to 2% for this 12 months and 1.1% for 2023.

“A extra restrictive financial coverage in the world will improve the menace to dangerous property,” ING Bank warned on Tuesday.

value

In Europe, aside from tourism and leisure (+0.2%), all different sectors ended in the red, together with the banking sector (-0.08%) erasing earlier beneficial properties linked to expectations of rate of interest hikes.

Real property (-4.1%), which ought to undergo on account of rising borrowing prices, confirmed the most important sectoral decline.

Unibail-Rodamco and Klépierre misplaced 4.29% and 4.39% respectively.

In phrases of enterprise outcomes, British DIY retailer group Kingfisher (-3.92%) was punished by an almost 30% drop in its half-12 months revenue, whereas German Henkel, up 1.22%, benefited from its natural progress forecast for this 12 months.

Fortum, Uniper’s largest shareholder (+3.83%), jumped 9.5% after saying plans to nationalize the German vitality provider, which might see German public authorities purchase the Finnish group’s stake.

On Wall Street

At the shut in Europe, the Dow Jones was down 1%, the S&P 500 was down 0.96% and the Nasdaq was down 0.53%. All main sectors of the S&P-500 are in the red.

Technology teams are experiencing combined fortunes with bargains in Apple (+1.91%) and Tesla (+1.35%), whereas Alphabet (-0.90%) and Amazon (-0.50%) are uncared for.

PayPal fell 2.55% after a suggestion downgrade.

Ford fell 9.74% because the automaker mentioned Monday that its provide prices would rise by about $1 billion greater than anticipated in the third quarter. Its competitor General Motors gained 4.63%.

change

The greenback, up 0.28% in opposition to different main currencies, hit its 20-12 months excessive recorded on 7 September. The dollar is benefiting from each its standing as a protected-haven asset and the prospect of sharp charge hikes, with a 100 foundation level probability of a 19% improve in credit score prices on Wednesday, in line with the FedWatch Barometer.

The euro fell beneath parity with the dollar at $0.9989 (-0.33%).

charge

Bond yields in Europe ended sharply, notably pushed by producer value figures in Germany, which recorded unprecedented progress in a 12 months and a month in August, up 45.8% and seven.9% respectively. This paves the way in which for additional acceleration of charge hikes in the euro space.

The ten-12 months German Bund yield closed at 1.94% (+15 factors), the best degree since January 2014; The 5-12 months one additionally rose 15 factors to 1.84% and the 2-12 months one, essentially the most delicate to charge adjustments, jumped greater than 12 factors to finish at 1.72%.

According to expectations of the evolution of credit score prices in the euro space, the interbank charge ought to attain 2.7% in August 2023.

In the US, the yield on ten-12 months Treasuries rose 9 factors to three.57% and the 2-12 months rose nearly three factors to three.97%.

the oil

Oil costs are penalized by greenback energy which might have an effect on demand. Signs of tight provide are limiting the extent of the decline, nonetheless, as an OPEC+ doc confirmed the group’s August output fell in need of a deliberate goal of three.583 million barrels per day (bpd).

Brent fell 1.82% to $90.33 a barrel and US gentle crude (West Texas Intermediate, WTI) fell 1.9% to $84.1.

(Written by Claude Chendjou, edited by Sophie Luet)

.

Leave a Reply

Your email address will not be published.