Stocks rebound ahead of highly anticipated Fed decision

by Blandine Henault

PARIS (Reuters) – Wall Street should benefit on Wednesday at the opening of the technical rebound observed at mid-session on European stock markets, after the volatility of the last few days linked to geopolitical concerns around Ukraine and uncertainties over American monetary policy. .

Big meeting of the day, the Federal Reserve (Fed) must announce at 19:00 GMT the decisions taken at the end of the two-day meeting of its Federal Open Market Committee (FOMC, the monetary policy committee) in terms of rate hike and central bank balance sheet reduction.

“The main question facing traders and investors ahead of this meeting is whether the Fed will raise interest rates four times this year and when the first rate hike will occur,” observes Naeem Aslam, head of the market analyst at Avatrade.

While waiting to learn more, investors in Europe are benefiting from a rebound in cyclical stocks, while the US technology compartment should benefit from Microsoft’s well-received results and forecasts. New York index futures are signaling an opening up 1.07% for the Dow Jones, 1.23% for the S&P 500 and 1.71% for the Nasdaq.

In Paris, the CAC 40 takes 2.26% to 6,992.39 points around 12:24 GMT. In Frankfurt, the Dax advances by 2.24% and in London, the FTSE takes 1.82%.

The pan-European FTSEurofirst 300 index rose by 2.13%, the EuroStoxx 50 for the euro zone by 2.26% and the Stoxx 600 by 2%.

WALL STREET VALUES TO FOLLOW

Besides Microsoft, investors will also be watching Boeing’s earnings release.

VALUES IN EUROPE

The tourism and leisure sector posted the strongest increase in Europe (+4.01%) with a gain of more than 7% for the airline group IAG and more than 4% for Accor, among the strongest increases in the world. CAC 40 with Airbus (+4.91%).

The automotive (+2.41%), basic resources (+2.98%) and banking (+2.8%) sectors also stand out.

In Paris, Renault gained 6.07%, followed not far by Stellantis (+4.25%), ArcelorMittal (+3.49%) and Société Générale (+3.65%).

Against the trend, the manager of retirement homes Orpea fell again by 6.99%, the red lantern of the Stoxx 600. The general manager of the group, implicated in a book-investigation on the management of its establishments, was summoned by the government.

EXCHANGES/RATES

The dollar remains not far from a two and a half week high hit on Tuesday before the Fed’s monetary policy decisions.

It gains 0.15% against a basket of reference currencies, including the euro, which amounts to 1.1277 dollars.

On the bond market, the yield on ten-year Treasuries was practically stable, at 1.7904%, while that of two-year US government bonds, which are more sensitive to changes in rates, gained nearly two basis points. , at 1.0392%.

In Europe, the yield of the ten-year German Bund took one basis point, to -0.07%.

OIL

Crude prices remain supported by geopolitical tensions around Russia and Ukraine.

Russian, Ukrainian, German and French representatives are meeting this Wednesday in “Normandy format” in Paris, a first for more than six months, while Russia is increasing military maneuvers on the border with Ukraine, leaving the threat of an invasion.

The barrel of Brent advances by 1.01% to 89.09 dollars and that of American light crude (WTI) gains 0.81% to 86.29 dollars.

(Report Blandine Hénault, edited by Laetitia Volga)