Rebound in sight on Wall Street in the aftermath of inflation

by Laetitia Volga

PARIS (Reuters) – Wall Street is expected to rebound at the opening and European stock markets move without much change on Thursday at mid-session as investors try to recover from the acceleration in US inflation that could prompt the Federal Reserve to review its low interest rate policy.

New York index futures are signaling an opening up 0.6% for the Nasdaq, 0.3% for the S & P-500 and 0.1% for the Dow Jones. In Paris, the CAC 40 gained 0.06% to 7,049.12 around 12:15 GMT. In Frankfurt, the Dax took 0.07% after posting a record high at 16,114.55 and in London, the FTSE was up 0.42%.

The pan-European FTSEurofirst 300 index rose 0.18%, the EuroStoxx 50 in the euro zone fell 0.08% and the Stoxx 600 rose 0.13%.

European stock markets are struggling to find a direction despite the rebound looming on Wall Street, the main indices of which closed lower on Wednesday in reaction to the unprecedented annual pace since 1990 reached by consumer prices last month, another sign that the inflation could set in for a long time.

“There wasn’t just one item in the data that sparked surprise yesterday, that was just it. You can’t ignore something so pervasive and it will strengthen the feeling that the Federal Reserve will hike its rate next year, “said Kit Juckes, strategist at Societe Generale.

On the side of encouraging news for investors, the real estate developer Evergrande made a new payment at the last minute of bond interest avoiding a default with potentially significant repercussions for the Chinese economy.

The European Commission has also revised up its economic growth forecast for the euro area this year to 5% and forecasts a solid expansion in 2022.

Trade volumes are however limited by the absence of some investors, this Thursday being a holiday in several countries.

VALUES TO FOLLOW AT WALL STREET

In pre-market trading on Wall Street, Tesla is gaining nearly 4% after boss Elon Musk sold about $ 5 billion (about $ 4.4 billion) in shares.

VALUES IN EUROPE

sectors exposed to China, notably basic resources and construction, gained 2.78% and 1.31% respectively after heavily indebted Evergrande avoided a default for the third time in a month.

In Paris, ArcelorMittal gained 4.33%, also driven by the announcement of an increase in its share buyback program of one billion dollars after having recorded its best quarter in more than ten years.

Engie takes 1.09% after raising its annual outlook and announcing the acquisition of the Spanish Eolia.

Down, Renault drops 3.66%, Daimler having announced the sale of its entire stake in the French manufacturer and Spie gives up 4.49% after Eiffage denied preparing an offer for the group.

The British luxury group Burberry yields 6.2% after posting a stable quarterly turnover, penalized by bad weather and travel restrictions in China.

Swiss chemicals company Sika climbs 10.08% after announcing its intention to buy the manufacturer MBCC, formerly BASF Construction Chemicals, from the Lone Star fund for 5.5 billion Swiss francs (5.2 billion euros ).

CHANGES

The dollar has peaked since July 2020 against a basket of benchmark currencies, with soaring inflation in the United States fueling speculation about a Fed rate hike.

The dollar index gained 0.13% and the euro fell back to 1.1470 dollars for the first time in over a year.

The British pound fell to an annual low against the greenback as growth in the UK economy slowed more than expected in the third quarter to 1.3% from + 5.5% in the second quarter and +1, 5% expected.

RATE

The yield on the ten-year German Bund is virtually unchanged at -0.253%, after climbing in the wake of its US counterpart which hit a one-week peak on Wednesday.

US bond markets are closed for “Veterans Day”.

OIL

The oil market continues its decline triggered the day before by fears that US inflation will prompt Washington to release more strategic crude reserves to lower prices.

Brent fell 0.59% to $ 82.15 per barrel and US light crude (West Texas Intermediate, WTI) lost 0.75% to $ 80.73.

(Laetitia Volga, edited by Blandine Hénault)