The rebound should continue for European equities – 07/07/2022 at 08:45

The rebound should continue for European equities - 07/07/2022 at 08:45


THE MAJOR EUROPEAN STOCK EXCHANGES ARE EXPECTED TO CONTINUE THEIR REBOUND

by Laetitia Volga

PARIS (Reuters) – The main European stock markets are expected to continue their rebound on Thursday at the opening the day after the publication of the unsurprising minutes of the last meeting of the Federal Reserve.

Futures contracts give an increase of 1.07% for the Parisian CAC 40, 1.05% for the Dax in Frankfurt, 1.22% for the FTSE in London and 1.23% for the EuroStoxx 50 .

The minutes of the Federal Reserve’s last monetary policy meeting did not bring any new element to the intentions of the institution, which is still determined to control rising inflation.

Fed officials have indicated their willingness to raise rates in July by 50 or 75 basis points.

“There have really been a lot of changes since they last met,” said Jim Paulsen, chief strategy officer at Leuthold Group. “There is a strong message coming from the economy, the bond market and the commodities market that (Fed policy) seems to be working and maybe the Fed will want to think about slowing down.”

The monetary tightening observed in recent months, spurred on by the Fed, fueled fears of recession, which led to the fall in the prices of metals, oil and also the euro.

Upcoming US jobs data, due on Friday, will fuel the debate but at this stage investors still overwhelmingly expect the Fed to hike another three-quarters point rate on the 27th. July.

The market will follow at 11:30 GMT the minutes of the last monetary policy meeting of the European Central Bank.

VALUES TO FOLLOW:

AT WALL STREET

The New York Stock Exchange ended up moderately on Wednesday after a choppy session as investors digested the contents of the Fed’s “minutes”. [.NFR]

The Dow Jones index gained 0.23% to 31,037.68 points, the S&P-500 gained 0.36% to 3,845.08 points and the Nasdaq Composite advanced 0.35% to 11,361.85 points.

Eight of the eleven main sectors of the S&P-500 finished in the green, in the first rank of which technologies (+0.88%). The energy sector fell 1.7% as oil prices declined on fears of a recession.

Futures are signaling a slightly higher session.

IN ASIA

The Nikkei in Tokyo advanced 1.47% supported by the rise in technology stocks and Wall Street indices the day before.

In China, the CSI 300 gained 0.29% and the Shanghai SSEC Composite index 0.19%.

The Kospi in South Korea gained 1.89% thanks in particular to Samsung (+3.37) which reported its best second quarter profit since 2018.

CHANGES

The euro regained 0.29% to 1.0211 dollars, remaining close to a 20-year low reached the previous day at 1.016 on concerns over growth.

The pound sterling posted a slight increase the day after a trough of more than two years against the greenback following the sensational departures of several ministers and members of the British executive.

“One of the reasons why the pound is not doing too badly is the feeling that a new Conservative government and a new Chancellor of the Exchequer will accelerate fiscal easing,” said Ray Attrill, at National Australia Bank, adding that the Bank of England’s dovish rhetoric also helps.

The dollar, for its part, fell nearly 0.21% against a basket of benchmark currencies.

RATE

On the government bond market, the yield on ten-year Treasuries is up slightly, around 2.933%.

Its German equivalent gained more than four basis points to 1.252% after falling the day before to its lowest level in five weeks at 1.072%.

OIL

Oil prices are evolving without much change, between concerns about supply and those about demand: Brent gains 0.12% to 100.81 dollars a barrel and American light crude (West Texas Intermediate, WTI) 0, 16% to $98.69.

(edited by Jean-Stéphane Brosse)

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