European stocks expected to fall ahead of services PMI – 05/10/2022 at 07:54

European stocks expected to fall ahead of services PMI - 05/10/2022 at 07:54


The word Bourse is visible on a panel outside the Palais Brongniart

Claude Shenjou

PARIS (Reuters) – Europe’s main stock markets were expected to fall on Wednesday due to profit-fixing after a sharp rise the day before on hopes of a lull in rate hikes by major central banks, while services PMIs are expected to ease. to be published.

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

Equity markets are expected to fall again as a deterioration in manufacturing activity in Europe and the United States in September fueled speculation on Monday that major interest rate hikes are coming to an end. Investors then believed that the latest economic indicators showed that the rise in the cost of credit was starting to take its toll, curbing demand. This scenario was further bolstered by a lower-than-expected rate hike by the Reserve Bank of Australia on Tuesday.

New Zealand’s central bank raised its key rate by 50 basis points to 3.5% on Wednesday and said it was considering a 75 basis point hike, suggesting inflation remains a challenge despite the risk of a recession.

On Wednesday, investors will closely monitor the monthly figures of the S&P Global Services Index in Europe and the United States, while the private firm ADP’s US employment survey is also expected ahead of the US Labor Department report. .

Earlier in the day, the jobs report (JOLTS) showed that they fell to their lowest level in almost two and a half years in August, signaling a worsening of the labor market.

The French state presented a takeover offer on Tuesday at a price of 12 euros per share for EDF’s capital balance, which it does not already own, and which is due to run from November 10 to December 8.

ON WALL STREET

The New York Stock Exchange continued on Tuesday its sharp rebound that began the day before, boosted by large stocks of the technology sector, the first beneficiaries of falling bond yields on hopes that the Federal Reserve will become less aggressive in terms of rate hikes.

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

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

The Nasdaq Composite index with a strong technological component increased by 360.97 points (3.34%) to 11,176.41 points.

In ASIA

On the Tokyo Stock Exchange, the Nikkei rose 0.53% to 27,136.33, while the larger Topix added 0.34% to 1,913.3 at the close.

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

BET

The 10-year U.S. Treasury yield, which hit a two-week low on Tuesday after already falling more than 20 basis points on Monday, rose again to 3.625% on Wednesday from 3.617% a day earlier.

The German Bund of the same maturity ended Tuesday at 1.88% after falling in the session to 1.77%, the lowest since September 19.

CHANGES

The dollar also recovered (+0.2%) against a basket of major currencies, including the euro, which lost 0.12% to $0.9971.

Sterling fell 0.24% to trade at $1.1449 after gaining for two sessions on the rejection of a project to abolish the top income tax bracket in the United Kingdom.

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

OIL

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

Brent fell by 0.15% to 91.66 dollars per barrel, and American light oil (West Texas Intermediate, WTI) – by 0.23% to 86.32 dollars per barrel.

(Writing by Claude Shenjou, Editing by Nicolas Delamet)

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