Business

European stocks purple, interest rate fears and recession – 11/17/2022 at 14:11


File picture of the London Stock Exchange Group premises in London

By Claude Chendjou

PARIS (Reuters) – Wall Street was anticipated to fall on Thursday and European inventory markets additionally traded within the purple within the mid-session, with market sentiment nonetheless dampened by latest macroeconomic indicators that raised fears of continued financial tightening by central banks. While geopolitical tensions are barely easing in opposition to a backdrop of excessive inflation.

New York index futures on Wall Street signaled a decline of 0.69% for the Dow Jones, 0.79% for the S&P 500 and 0.76% for the Nasdaq.

In Paris, the CAC 40 fell 0.82% to six,553.31 round 12:45 GMT. In Frankfurt, the DAX misplaced 0.17% and in London, the FTSE misplaced 0.56%.

The pan-European FTSEurofirst 300 index was down 0.52%, the euro zone’s EuroStoxx 50 was down 0.56% and the Stoxx 600 was down 0.63%.

Some analysts, corresponding to Brian Jacobsen of Allspring Global Investments, imagine {that a} sharper-than-anticipated enhance in US retail gross sales in October could have led the US Federal Reserve (Fed) to evaluate that its rate hikes haven’t but produced the anticipated rate hikes. Impact on the economic system.

Fed officers corresponding to Christopher Waller and Mary Daly have additionally remained hawkish, believing there may be nonetheless a protracted technique to go in elevating credit score prices.

Currency markets are relying on a 93% likelihood of a half-level rate hike within the U.S. on Dec. 14, with only a 7% likelihood of a 3-quarter level hike. However, summer time sees the very best rate round 5%, in opposition to the present vary of three.75-4%.

JPMorgan economists, for his or her half, estimate that the Fed ought to increase charges by 100 foundation factors by March 2023, whereas the American economic system may register a “delicate recession” within the second half of 2023 with an anticipated continuation of fiscal tightening.

In Europe, inflation within the euro zone was barely weaker than initially estimated in October, at 10.6% on an annual foundation, based on remaining figures launched Thursday by Eurostat, however remained at file ranges.

In the UK, the place inflation reached 11.1%, the very best since 1981, the federal government on Thursday introduced a brand new draft finances marked by tax will increase and cuts in authorities spending, attempting to revive market confidence after a monetary storm that finally compelled Prime Minister Liz Truss resigned final month.

The British authorities additionally introduced that it expects the economic system to contract by 1.4% subsequent yr.

On the geopolitical stage, Russia fired a recent salvo of missiles at a number of main Ukrainian cities on Thursday as Kyiv continued to insist that the missile that hit Poland on Tuesday was not Ukrainian and known as for participation within the ongoing investigation into the incident.

Follow Wall Street requirements

Nvidia gained 2.8% in pre-market after reporting higher-than-anticipated quarterly gross sales on Wednesday night, pushed by sturdy demand in information facilities. Advanced Micro Devices took 0.9% and Intel took 0.6%.

Cisco Systems led the inventory market by 4% after releasing quarterly outcomes that beat expectations, elevating its annual forecast and saying a restructuring plan that might have an effect on about 5% of its workforce.

Values ​​in Europe

In the inventory market, the session was pushed by blended outcomes from giant teams corresponding to Bouygues, which misplaced 6.14% after abandoning its 2023 margin goal for its subsidiary Colas amid value uncertainty.

On the opposite hand, Siemens, assured concerning the future, jumped 7% after saying a greater-than-anticipated quarterly revenue and merging 5 of its operations right into a separate entity.

Burberry’s anticipated quarterly gross sales are additionally praised, whereas Dutch insurer NN Group’s 2025 outlook (-6.97%) is taken into account disappointing. Thyssenkrupp fell 2.71% because the German group warned that its earnings and gross sales would fall considerably in 2023.

By sector, nearly all Stoxx 600 compartments are within the purple, with primary assets posting the most important drop (-2%) amid fears of a recession.

change

The greenback gained 0.52% in opposition to a basket of worldwide currencies, on expectations of continued rate hikes when a number of Fed officers, together with Raphael Bostick, Loretta Mester and Neil Kashkari, are attributable to communicate this Thursday.

The euro, down 0.52%, is buying and selling at $1.0338.

The pound sterling fell 0.77% to $1.1816 after the presentation of the brand new British finances.

rate

U.S. bond yields are on the upswing: up practically three foundation factors over ten years to three.72% and two years to 4.36%.

In Europe, the ten-yr German Bund yield fell practically three factors to 1.97% and the 2-yr fell 4 factors to 2.07%, based on merchants within the newest assertion from two financial institution officers. The European Central Bank (ECB), Robert Holzmann and Pablo Hernández de Cos, who argue for elevated warning within the financial tightening of the Frankfurt establishment, are at threat of stagnation within the euro space.

the oil

Oil costs fell on fears of Chinese demand for crude oil amid a resurgence of the COVID-19 outbreak within the nation.

Brent fell 1.41% to $91.55 a barrel and US gentle crude (West Texas Intermediate, WTI) fell 1.85% to $84.01 a barrel.

(Writing by Claude Chendjou, Editing by Jean-Michel Bellot)

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