Business

Stocks red in Europe as Fed waits – 09/20/2022 at 12:50 pm


Symbol of the London Stock Exchange

By Claude Chendjou

PARIS (Reuters) – Wall Street is predicted to fall at the open on Tuesday, forward of the primary day of the U.S. Federal Reserve’s financial coverage assembly, and European shares are additionally in the red in the mid-session that ought to lead. A pointy enhance in rates of interest on Wednesday at the chance of an acceleration of the deterioration of financial circumstances.

New York index futures on Wall Street signaled a decline of 0.40% for the Dow Jones, 0.47% for the S&P 500 and 0.57% for the Nasdaq.

In Paris, the CAC 40 was down 0.95% at 6,003.92 by 10:15 GMT. In Frankfurt, the DAX yielded 0.83% and in London, the FTSE closed on Monday as a result of funeral of Queen Elizabeth II, down 0.19%.

The pan-European FTSEurofirst 300 index was down 0.55%, the euro zone’s EuroStoxx 50 was down 0.74% and the Stoxx 600 was down 0.73%.

Faced with the continuation of excessive inflation, which reached 8.3% in a yr in August in the United States, the choices of the Fed’s Federal Open Market Committee (FOMC), which met on Tuesday, are extremely anticipated by buyers.

Markets are primarily relying on a 75 foundation level charge hike, however a 100 level hike has not been dominated out.

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

Monetary coverage selections by the Bank of England (BoE), Bank of Japan (BoJ) and Swiss National Bank (SNB) can be introduced on Thursday. Switzerland additionally reduce its development forecast considerably on Tuesday, to 2% for this yr and 1.1% for 2023.

In the euro zone, the place the European Central Bank (ECB) raised its charge by 75 factors earlier in the month, its president, Christine Lagarde, should communicate in the night throughout a debate in Germany.

“It’s all about central banks this week,” mentioned Erik-Jan van Hern, macroeconomic strategist at RaboResearch.

Meanwhile, official figures launched on Tuesday confirmed producer costs in Germany recorded unprecedented yr-on-yr and month-on-month will increase in August, up 45.8% and seven.9% respectively.

Values ​​in Europe

The banking compartment (+0.55%), supported by expectations of rising rates of interest, posted the strongest rise in the Stoxx 600, whereas actual property (-3.84%), which can endure as a result of rising prices of credit score, confirmed a pointy drop.

Unibail-Rodamco and Klépierre misplaced 1.74% and 1.38% respectively, whereas Commerzbank superior 1.84%.

Luxury shares such as Kering (+0.57%) or Richemont (+0.69%) are additionally in demand, profiting from the scheme to additional ease well being restrictions in China.

In phrases of enterprise outcomes, British DIY retailer group Kingfisher (-3.31%) was punished by an almost 30% drop in its half-yr revenue, whereas German Henkel, up 0.83%, benefited from its natural development forecast for this yr.

charge

Bond yields continued to rise in Europe, pushed by producer worth knowledge in explicit in Germany

The ten-yr German bund was at a 3-month excessive of 1.89%, up from a 5-yr excessive of 1.8% since July 2011, and the 2-yr, probably the most delicate to charge adjustments, was at 1.69%, the best since July 2011.

Expectations of the evolution of credit score prices present an interbank charge of two.7% in the euro zone in August 2023.

In the US, the ten-yr Treasury yield rose almost 5 factors to three.54% and the 2-yr yield almost three factors to three.97%.

change

The greenback (+0.13%) is close to its 20-yr excessive in opposition to different main currencies, recorded on 7 September.

The euro, down 0.16% to $1.0006, was simply above parity with the dollar.

The Swedish krona briefly benefited from a shock charge hike by the nation’s central financial institution in the morning to commerce at 10.7025 to the euro and 10.764 to the greenback earlier than later shedding all of its positive factors.

the oil

Oil costs have been supported by provide tensions, an OPEC+ doc confirmed the group’s manufacturing in August was under the deliberate goal of three.583 million barrels per day (bpd).

Investors are additionally waiting for the Fed’s selections in the approaching months to attempt to assess their penalties on world demand for crude oil.

Brent nibble gained 0.01% to $91.99 a barrel and American mild crude (West Texas Intermediate, WTI) gained 0.27% to $85.50.

(Writing by Claude Chendzu, Editing by Kate Entringer)

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