European stocks ahead of Services PMIs expected lower – 05/10/2022 at 07:54


The word Stock Exchange can be seen on a plaque near the Palais Brongniart

by Claude Chendjou

PARIS (Reuters) – Major European stock markets are expected to fall on Wednesday on profit-taking after the sharp rise the day before, linked to hopes of a lull in rate hikes by major central banks, while services PMI indexes are due to be released will.

According to the first available indications, the Dax in Frankfurt, which gained 3.78% on Tuesday, should lose 0.43% at the opening on Wednesday. The FTSE 100 in London, which closed up 2.59% yesterday, is expected to fall 0.37%. The EuroStoxx 50 index is expected to fall 0.35% after rising 4.2% on Tuesday.

Stock markets are expected to fall again as the deterioration in manufacturing activity in Europe and the United States in September has fueled speculation since Monday that the big rate hike may end. Investors then believed that the latest economic indicators showed that the increase in the cost of borrowing was beginning to have an impact as demand slowed. This scenario was further reinforced by the Australian central bank’s lower-than-expected rate hike on Tuesday.

On Wednesday, New Zealand’s central bank raised its key interest rate by 50 basis points to 3.5% and said a 75 basis point hike was under consideration, a sign that inflation remains a concern despite the risk of a recession.

Investors will be watching monthly numbers from the S&P Global Services Index in Europe and the United States on Wednesday, while a private ADP survey of US employment is also expected ahead of Friday’s report from the US Department of Labor.

The day before, a report on job vacancies (“JOLTS”) showed that they had fallen to their lowest level in almost two and a half years in August, a sign of a deteriorating job market.

The French state presented on Tuesday a takeover bid at a price of 12 euros per share for EDF’s capital not yet held by it, which is to run from November 10th to December 8th.

ON WALL STREET

The New York Stock Exchange on Tuesday continued its strong recovery that had started the day before, fueled by big tech stocks, the first beneficiaries of the fall in bond yields on hopes that the Federal Reserve would become less aggressive on interest rates Hikes. ‘Interest.

The Dow Jones Industrial Average rose 2.8%, or 825.43 points, to 30,316.32 points.

The broader S&P 500 rose 112.5 points, or 3.06%, to 3,790.93 points, its biggest gain since May 2020.

For its part, the heavily tech-heavy Nasdaq Composite rose 360.97 points (3.34%) to 11,176.41 points.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index rose 0.53% to 27,136.33 points and the larger Topix rose 0.34% to 1,913.3 points as the close neared.

Meanwhile, in China, the SSE Composite of Shanghai is down 0.55% and the CSI 300 is down 0.58%.

EVALUATION

The US 10-year Treasury yield, which hit a two-week low on Tuesday after falling more than 20 points on Monday, rebounded to 3.625% on Wednesday from 3.617% the previous day.

That of Germany’s Bund with the same maturity ended Tuesday at 1.88% after falling to 1.77% in the session, its lowest level since September 19.

CHANGES

The dollar also gained ground (+0.2%) against a basket of benchmarks, including the euro, which fell 0.12% to $0.9971.

Sterling, down 0.24%, is trading at $1.1449 after two sessions of benefiting from the abandonment of the UK upper income tax bracket project.

The yen is almost flat against the dollar at 144.06 (+0.02%).

OIL

Oil prices, which rose sharply on Tuesday, are steady, while OPEC+ is due to hold a meeting on Wednesday that could decide a two million barrels per day (bpd) cut in the cartel’s output.

Brent fell 0.15% to $91.66 a barrel and US light oil (West Texas Intermediate, WTI) fell 0.23% to $86.32 a barrel.

(Written by Claude Chendjou, edited by Nicolas Delame)

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