New rise in sight before two important meetings in the USA (updated) – 08/17/2022 at 08:42


EUROPE EXPECTED ON THE RISE

PARIS (Reuters) – The main European stock markets are expected to rise on Wednesday before the two main economic events of the week in the United States, which will be the publication of monthly retail sales figures and that of the minutes of the last meeting of the Federal Reserve.

Futures contracts on indices suggest an increase of 0.42% for the CAC 40 in Paris, 0.14% for the Dax in Frankfurt, 0.22% for the FTSE 100 in London and 0.24% for the EuroStoxx 50.

The Parisian market can therefore hope for a sixth consecutive session in the green after a cumulative gain of 1.58% over the last five.

US retail sales, which will be released at 12:30 GMT, are expected to be up slightly for July but slightly down excluding autos according to the Refinitiv consensus. After the decline in gasoline prices, these figures could help to better assess the risk of a recession in the United States.

But investors are especially awaiting the “minutes” of the July meeting of the Fed, at 6:00 p.m. GMT, which could give them new indications on the extent of the rate hike to be expected for September.

After the fluctuations of the last few weeks according to the inflation figures, the markets estimate today at 57.5% the probability of an increase limited to 50 basis points, against 42.5% for a rise of three quarters points, according to the FedWatch barometer

The meeting will also be animated by the results of the American distributors Target and Lowe’s, after those of Walmart and Home Depot on Tuesday, which reassured on the consumption of Americans.

VALUES TO FOLLOW:

AT WALL STREET

The New York Stock Exchange ended in mixed order on Tuesday, with the Dow Jones and the S&P 500 benefiting from strong results and forecasts from Walmart and Home Depot while Nasdaq was held back by the decline in technology stocks.

The Dow Jones Index gained 0.71%, or 239.57 points, to 34,152.01, the Standard & Poor’s 500 gained 8.06 points, or 0.19%, to 4,305.2 and the Nasdaq Composite rose. fell 25.5 points (-0.19%) to 13,102.55.

The S&P 500 ended very close to its 200-day moving average, an important technical level above which it has not closed since early April.

Home Depot (+4.02%) reported better-than-expected quarterly sales on Tuesday, and Walmart (+5.1%) said it expected a smaller drop in annual profit than it had expected. last month.

At the same time, the rise in bond yields penalized high technology stocks such as Microsoft (-0.26%) or Salesforce (-0.79%).

Futures on the major indices suggest an open close to breakeven for now.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index ended up 1.23% in the wake of Wall Street, recording its first close at more than 29,000 points since January 5.

In China, the Shanghai SSE Composite rose 0.45% and the CSI 300 0.96%, benefiting from the rebound in real estate values ​​thanks to hopes of new support measures for the sector.

Several sources told Reuters that Beijing will guarantee new bond issues from a small number of real estate groups; furthermore, the National Development and Reform Commission, the country’s main planning body, has assured that it will support demand and speed up infrastructure projects.

CHANGES

The dollar is down slightly against other major currencies (-0.06%) and the euro is trading around 1.0180 in sluggish trading.

The star of the day on the foreign exchange market for once is the New Zealand dollar, which appreciates after the monetary policy statement from the central bank of New Zealand.

The latter raised its key rate by 50 basis points, as expected, and explained that it could accelerate the continued rise in the cost of money in the months to come.

The pound sterling is up slightly after the monthly inflation figures in the United Kingdom, which reached 10.1% in July after 9.4% in June.

RATE

On the bond market, the yield on two-year US Treasury bills, the most sensitive to interest rate expectations, rose to 3.2953%, while the ten-year was stable at 2.8403%.

Both rose on Tuesday after results from Walmart and Home Depot, in which stakeholders saw an argument for continued monetary tightening by the Fed.

In the European market, the German ten-year is virtually unchanged in early trade at 0.983%.

OIL

The oil market is recovering after hitting six-month lows on Tuesday: Brent rose 1.19% to $93.44 a barrel and US light crude (West Texas Intermediate, WTI) 1.32% to 87.67 dollars.

This incipient rebound is based, among other things, on figures from the American Petroleum Institute (API), which show, according to market sources, a drop in stocks of crude oil and fuels last week in the United States.

Investors are also awaiting clarification on the talks between Iran and the West on nuclear power.

(Writing by Marc Angrand, editing by Kate Entringer)

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