Traders on the New York Stock Exchange (NYSE)
by Claude Chendjou
Wall Street is expected to be in disarray on Thursday and the European stock markets are in the red at mid-session against a backdrop of renewed tensions in the bond compartment while the American Federal Reserve (Fed) has revised downwards its projections for the rate of reduction rate for this year.
Futures on New York indices signal a Wall Street opening down 0.32% for the Dow Jones, an increase of 0.02% for the Standard & Poor’s 500 and 0.49% for the Nasdaq the day after ‘a session already in dispersed order.
In Paris, the CAC 40 dropped 1.18% to 7,771.95 points around 10:10 GMT. In Frankfurt, the Dax lost 1.05% and in London, the FTSE fell 0.48%.
The pan-European FTSEurofirst 300 index declined by 0.72%, the Eurozone EuroStoxx 50 by 0.99% and the Stoxx 600 by 0.81%.
The drop on Thursday in Europe is explained by profit taking while the Stoxx 600 gained around 1% the day before and a slight stress on sovereign bond yields, while the Fed’s message is variously interpreted.
The American central bank indicated on Wednesday evening that it only planned one rate reduction for this year, probably in December, but it noted “further modest progress” towards the inflation objective of 2%, a wording reflecting an improvement compared to the May 1 press release.
“The Fed says the last mile to reach 2% inflation will be longer, but the market still believes in satisfactory growth and employment prospects which will allow a soft landing (of the economy),” comments Saurabh Sud, portfolio manager at T. Rowe Price. The hypothesis of a “soft landing” in the United States has been one of the major drivers of the stock rally in recent months.
The publication at 12:30 GMT of monthly producer price figures in the United States could provide the market with new clues for the trajectory of inflation.
In the eurozone, the political risk arising from the earthquake in France caused by the European elections is still present.
“The political situation does not favor the appetite for European equities, while uncertainty pushes European yields upwards and contributes to a widening of the spread,” notes Ipek Ozkardeskaya, analyst at Swissquote Bank.
Most sectors of the Stoxx 600 are thus in the red, in particular that of real estate (-1.01%), sensitive to fluctuations in rates.
VALUES TO FOLLOW AT WALL STREET
VALUES IN EUROPE
Stellantis fell 2.31% despite the manufacturer’s announcement of a dividend payment of at least 7.7 billion euros and share buybacks in 2024. According to traders, the market is disappointed by the maintaining the group’s financial forecasts. The European automobile index fell 2.19%, one of the biggest sectoral declines.
Atos takes 2.44% in a volatile session while the group said Thursday that it had initiated discussions on the financial restructuring proposal submitted by the OnePoint consortium.
Lufthansa, placed on negative watch by JPMorgan, fell 5.34% after the intermediary warned of a drop in prices in the second quarter on long-haul flights.
BT gained 3.09% thanks to a 3.16% stake taken by Mexican tycoon Carlos Slim in the capital of the British telecoms group.
Wise plunges 16.65%, at the bottom of the Stoxx 600, the British money transfer group having announced that it anticipates a slowdown in its turnover growth for its new annual fiscal year.
RATE
The yield on ten-year US Treasury bonds rose 1.5 basis points (bps), to 4.3082%, after falling eight points on Wednesday.
That of the German Bund with the same maturity advanced by 1.7 bps, to 2.549%, while the French OAT stood at 3.1811%, up 2.7 bps. The spread between these two bonds climbs to 63.03 bps, compared to around 50 bps before the European results.
CHANGES
The dollar rose slightly on Thursday, recovering part of the previous day’s losses after the Fed’s announcements. The greenback gains 0.10% against a basket of reference currencies.
The euro lost 0.05%, to 1.0802 dollars, after a surge on Wednesday following the publication of monthly consumer price figures in the United States, which showed unexpected stagnation in May.
The European currency has faced intense volatility since the start of the week, fueled by political uncertainty in France with the holding of early legislative elections on June 30 and July 7.
OIL
The oil market is falling, victim of the prospect of a postponement until the end of the year of the reduction in key rates in the United States. The stronger-than-expected rise in crude oil stocks last week is also weighing on prices.
Brent fell 0.92% to $81.84 per barrel and American light crude (West Texas Intermediate, WTI) dropped 1.02% to $77.70.
(Written by Claude Chendjou, edited by Blandine Hénault)
