MARKET POINT: New rise in Europe in sight despite doubts – 10/14/2022 at 07:55 a.m

Traders on the New York Stock Exchange (NYSE)

Traders on the New York Stock Exchange (NYSE)

PARIS (Reuters) – Major European stock markets are likely to rise sharply on Friday after Wall Street’s spectacular turnaround, as investors clearly chose to look beyond higher-than-expected inflation in the United States and its implications for future interest rate hikes to look prices.

Futures contracts on indices point to gains of 1.87% for the Dax in Frankfurt, 0.93% for the FTSE 100 in London and 1.84% for the EuroStoxx 50. As for the CAC 40 in Paris, it could take more than 1.7% according to the first indications available.

All already ended in the green on Thursday, despite the announcement of a stronger-than-expected 0.4% rise in the US consumer price index (CPI) in September and the acceleration in core inflation (excluding energy and food) to 6.6%. over a year.

That said, with less than three weeks to go before the Federal Reserve meeting, those stats have raised interest rate expectations, with markets pricing the probability of a three-quarter-point hike next month at 86.6%, and an even bigger hike at 13.4% 100 Real-time barometer basis points FedWatch.

And the scenario of another hike of 75 basis points in December has solidified, as has that of a 5% rate hike.

As for equities, for the time being Wall Street seems able to continue its recovery, the duration of which will largely depend on the tone of the earnings release, which will multiply in the coming weeks.

In Europe, investors in the near future are mainly waiting to know whether the Bank of England will indeed end its bond purchases this Friday and whether the Liz Truss government will change its budget plans.

The UK Treasury Secretary has cut short his stay in the United States for the International Monetary Fund (IMF) meeting, according to multiple sources.

The upcoming session will also be dictated by the United States retail sales figure at 12:30 GMT and then by the first estimate of the Michigan Confidence Index.

ON WALL STREET

The New York Stock Exchange closed sharply higher on Thursday, taking advantage of approaching technical support and protection buying after the sharp drop earlier in the session in response to consumer price data.

The Dow Jones Index rose 2.83%, or 827.87 points, to 30,038.72, the Standard & Poor’s 500 rose 92.88 points, or 2.60%, to 3,669.91 and the Nasdaq Composite rose 232.05 points (+2.23%) to 10,649.15.

The S&P 500 recorded a total of almost 194 points from the morning low to the afternoon high, the largest single move since Jan. 24. Some strategists explain this reversal as approaching support around 3,500 points.

All sectors benefited from the rise, but the most spectacular gains were in energy (+4.08%) and financials (+4.14%).

Futures contracts are pointing to further gains for now, with gains of around 0.6%.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index is up 3.3% in less than an hour after the close and is heading for its best daily performance since March after four straight sessions of decline.

In addition to the momentum emanating from Wall Street, it benefits from strong results from Fast Retailing, Uniqlo’s parent company, which rose 8.1%.

In China, the Shanghai SSE Composite gained 1.83% and the CSI 300 2.39% for this latest session ahead of the opening of the 20th Communist Party Congress, benefiting from statements by the Governor of the People’s Bank of China showing a stronger promised support for the real economy.

EVALUATION

US Treasury yields fell somewhat in Asia as the market seemed to regain its breath after reporting fresh highs on Thursday in response to inflation data.

The 10-year bond appears at 3.9443% after rising to 4.08% in Thursday’s trading session, its highest since October 2008, and the 2-year bond returned to 4.4452% after hitting 4.464%, a 15 year old high.

CHANGES

The dollar is broadly flat (+0.02%) against other majors after falling 0.5% on Thursday as renewed risk appetite drove traders away from safe havens.

The euro is trading at $0.9775, up 0.02%.

The pound fell 0.13% against the greenback after falling 2% on Thursday in response to reports in the UK press that Liz Truss’s government plans to abandon at least some of the tax and tariff cuts it announced last month. has increased.

OIL

The oil market remains on the sidelines of the euphoria benefiting equities and remains little changed amid swings in the dollar, recession fears and questions about the US-Saudi Arabia relationship.

Brent rose 0.13% to $94.69 a barrel and US light crude (West Texas Intermediate, WTI) rose 0.17% to $89.26.

Both are showing about 3% declines since the start of the week at this point, after two weeks of gains.

(Written by Marc Angrand, edited by Matthieu Protard)

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