by Claude Chendjou
PARIS (Reuters) – The main European stock markets are expected to open on a cautious recovery on Monday, but the session could again be dominated by a wait-and-see attitude, with U.S. inflation figures on Tuesday and monetary policy decisions from the Federal Reserve (Fed) on Wednesday .
Futures contracts on indices suggest a rise of 0.40% for the CAC 40 in Paris, 0.41% for the Dax in Frankfurt, 0.43% for the FTSE 100 in London and 0.40% for the EuroStoxx 50.
Equity markets have moved cautiously since last week with little change due to the impending announcements from several major central banks.
In addition to the Fed, which begins a two-day monetary policy meeting on Tuesday and announces its decision on Wednesday, that from the European Central Bank (ECB) is expected on Thursday and that from the Bank of Japan (BoJ) on Friday.
Last week, the central banks of Australia (RBA) and Canada (BoC) surprised investors by choosing to raise their respective key interest rates, while a status quo was expected. On Sunday, Swiss National Bank (SNB) President Thomas Jordan warned that “the fight against inflation is not yet over” and said he could not rule out further monetary policy tightening on 22 June.
Citi strategists believe the Fed could be tempted to follow in the RBA’s and BoC’s footsteps by recognizing that a rise in credit costs is still needed to combat inflation.
As for the Fed, market participants expect a pause this month before a further hike in July. The ECB, meanwhile, is expected to continue its tightening with another rate hike of 25 basis points on Thursday, while the BoJ in Japan is expected to continue with its ultra-accommodative policy.
In terms of US macroeconomic indicators, after recent mixed data showing mainly a fall in inflationary pressures and a slowdown in activity, the Consumer Price Index (CPI) for May, scheduled for Tuesday, is especially awaited. The Reuters consensus on CPI calls for flat month-on-month and a deceleration to 5.3% year-on-year.
On the same day, the final German inflation figures for the month of May will be published before the figures for the entire euro area on Friday.
UBS announced on Monday that it has completed the acquisition of Credit Suisse, creating a banking giant with more than $5 trillion in assets under management.
BY WALL STREET
The New York Stock Exchange, backed by Tesla, ended Friday slightly higher, with the S&P-500 and Nasdaq hitting year-to-date highs.
The Dow Jones Industrial Average rose 0.13%, or 43.17 points, to 33,876.78.
The broader S&P-500 rose 4.93 points, or 0.11%, to 4,298.86.
The Nasdaq Composite, with a strong technology component, rose 20.62 points (0.16%) to 13,259.14 points.
During the week, the Dow rose 0.34%, the S&P 0.39% and the Nasdaq 0.14%. This is the fourth straight week of gains for the S&P, which had not happened since July-August of last year, and the seventh for the Nasdaq, a streak not seen since October-November 2019.
Wall Street has been buoyed for weeks by investors’ return to big-cap technology, a better-than-expected quarterly earnings season and the prospect of the Fed pausing its monetary policy tightening, despite mixed macroeconomic indicators hovering. recession in the United States.
Tesla gained 4.06% after announcing a deal with General Motors (+1.06%), which will again adopt the electric car charging system from the manufacturer led by Elon Musk, whose network could become the norm in the United States.
Netflix gained 2.6% after Wall Street Journal reports that the online video specialist saw its subscriptions skyrocket following its restrictions on password sharing.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei rose 0.33% to 32,371.22 and the broader Topix gained 0.64% to 2,238.52 as the close approached.
In today’s indicators, wholesale inflation in Japan fell for a fifth straight month in May to 5.1% year-on-year on lower fuel and commodity prices, a sign that cost pressures that have pushed up consumer prices may be easing .
The MSCI index, which includes the Asia-Pacific shares (excluding Japan), lost 0.17% to 519.96 points after hitting a high of more than a month and a half on Friday at 521.94 points.
In China, the Shanghai SSE Composite rose 0.06% and the CSI 300 gained 0.3%.
EXCHANGE/EXCHANGE RATES
The dollar is steady (+0.06%) on Monday against a basket of benchmark currencies, but traders remain on guard ahead of Fed decisions. The U.S. dollar index posted a loss of nearly 0.5% last week, the worst weekly decline since mid-April.
The euro is shown at $1.0742 (-0.05%) and the pound sterling at $1.2571 (+0.02%).
In the bond market, the yield on 10-year US Treasuries was largely unchanged at 3.7588% after rising 3.1 basis points on Friday.
OIL
The oil market, which had a second straight weekly decline on Friday, lost further ground on Monday. The black gold suffered from questions about the Fed, worries about Chinese demand and the rise in crude oil exports from Russia to China and India.
Brent fell 1.2% to $73.89 a barrel and US crude (West Texas Intermediate, WTI) 1.23% to $69.31.
(Written by Claude Chendjou, edited by Tangi Salaün)
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