Traders work on the floor of the New York Stock Exchange
by Claude Chendjou
A rebound is expected on Wall Street at the opening on Thursday, investors having now digested the monetary policy announcements from the Federal Reserve (Fed), while in Europe, the stock markets are in turn struggling at mid-session .
Futures on New York indices signal an opening on Wall Street up 0.39% for the Dow Jones, 0.43% for the Standard & Poor’s 500 and 0.42% for the Nasdaq the day after the strong fall in indices, falling to multi-month lows. In Paris, the CAC 40 fell by 1.54% to 7,272.6 points around 11:40 GMT. In Frankfurt, the Dax lost 1.23% and in London, the FTSE lost 1.41%.
The pan-European FTSEurofirst 300 index fell by 1.58%, the eurozone’s EuroStoxx 50 by 1.57% and the Stoxx 600 by 1.46%.
The negative trend in Europe is linked to the monetary policy decisions made by the Fed on Wednesday. The US central bank lowered its key rates for the third time in as many meetings but suggested that the pace of its monetary easing would now slow with only two cuts planned in 2025, compared to three to four expected by the market.
After this initial disappointment, investors across the Atlantic now seem more measured, making a cautious return to risky assets, taking advantage of cheap purchases.
“Wall Street’s reaction underscores the Fed’s delicate balancing act as it tightens its easing outlook, forcing markets to recalibrate their rate expectations,” writes Matt Britzman, equity analyst at Hargreaves Lansdown.
“Investors should view this as healthy profit-taking rather than the end of the party, after what has been a fantastic ride for markets since the US election,” he added.
In Europe, however, the time remains for caution, especially as the Bank of England must make its monetary policy decision at 12:00 GMT after that of the Bank of Norway and the Bank of Sweden. Investors particularly fear a significant widening of the rate gap between the United States and Europe.
All major sectors of the Stoxx 600 are in the red, starting with new technologies, very sensitive to rate fluctuations, which is down by more than 2%. VALUES TO FOLLOW AT WALL STREET
Mega-caps like Tesla and Nvidia rebounded around 2% in pre-market trading, while Micron Technology fell 15% after announcing it expected quarterly revenue and profit below Wall Street expectations.
VALUES IN EUROPE
Stocks in the electronic chip sector, including ASML, Infineon Technologies and STMicroelectronics fell between 3.79% and 5.69%. Valneva gains 2.84% after announcing to increase the accessibility of its vaccine against Chikungunya in Asia.
Atos lost 4.76% after announcing the finalization of its financial restructuring.
SoftwareOne Holding jumped 8.70%, as the Swiss technology group announced an agreement to buy Crayon Group (-5.18%), valuing its Norwegian competitor at around $1.34 billion.
RATE
The yield on ten-year US Treasury bonds rose by 3.6 basis points, to 4.5321%, in the wake of the Fed’s announcements.
The yield on ten-year German bonds, the benchmark for the euro zone, increased by 5.8 points, 2.298%, to the highest level since the end of November.
EXCHANGES The dollar is stable at mid-session after having flirted in the morning with a two-year peak after the decision of the American Federal Reserve, climbing to more than 108 points, against a basket of reference currencies.
The yen fell 1.38% to 156.94 per dollar after the Bank of Japan (BoJ) kept rates unchanged and gave few clues on its monetary outlook.
The euro advanced 0.56%, to 1.0411 dollars, while the pound sterling traded at 1.2635 dollars (+0.49%) before the BoE announcements.
OIL
The oil market is in decline after announcements from the American Federal Reserve, which could have an impact on fuel demand: Brent fell by 0.30% to 73.18 dollars per barrel and American light crude (West Texas Intermediate , WTI) by 0.21% to $70.43.
(Written by Claude Chendjou, edited by Blandine Hénault)
