Former Paris Stock Exchange building
by CORENTIN CHAPRON
The main European stock markets are expected to fall at the opening on Wednesday, with the latest US data suggesting that the key rate will remain high in the United States.
Futures contracts suggest an opening down 0.29% for the Parisian CAC 40, compared to 0.08% for the FTSE in London, 0.34% for the Dax in Frankfurt, and 0.36% for the Stoxx 600. .
The number of available jobs (JOLTS) surprised on the rise on Tuesday, an illustration of the resistance of the American labor market to rate increases and which dismisses concerns about employment, the second mandate of the Federal Reserve (Fed).
The ISM services indicator published on Tuesday also surprised on the upside, with the price component of the ISM rebounding to its highest level since February 2023.
However, a more marked decline in inflation towards its target is the condition for further rate cuts, the Fed warned in December: these figures and the stagnation of underlying PCE inflation for two quarters therefore remove the prospect of a new relaxation in the United States.
“The bearish reaction of American indices following the publication of these figures shows that the feeling 'good news is bad news' has made a comeback and that the market 'prefers' to worry about the absence of further rate cuts rather than welcoming the good figures”, comments Alexandre Baradez, head of market analysis at IG France.
Numerous indicators, including figures for weekly unemployment registrations and job creation by the private sector ADP, are expected on Wednesday.
The Labor Department's monthly employment report will be released on Friday, which will provide a more complete picture of labor supply and demand in December.
A WALL STREET
The New York Stock Exchange ended lower on Tuesday after the publication of solid economic data fueling fears that a rebound in inflation could push the American Federal Reserve (Fed) to slow the pace of its monetary easing.
The Dow Jones index lost 0.42%, or 178.20 points, to 42,528.36 points.
The broader S&P-500 lost 66.35 points, or 1.11%, to 5,909.03 points.
The Nasdaq Composite fell 375.30 points (1.89%) to 19,489.68 points.
While they had initially recorded gains at the start of the session, the main Wall Street indexes flipped after the publication of a report from the US Department of Labor showing a greater increase than expected in the number of job offers in november.
IN ASIA
The Tokyo Stock Exchange ended lower as investors reassessed the Fed's rate path. The Nikkei index lost 0.26% to 39,981.06 points. The broader Topix lost 0.59% to 2,770.00 points.
Advantest took 2.97% and Tokyo Electron 1.46%.
Economic and geopolitical uncertainties weighed on Chinese indices. The Hong Kong Hang Seng index declined by 0.91%, the Shanghai SSE Composite gained 0.02%, the CSI 300 fell by 0.18%.
RATE
American rates vary shortly before the publication of new indicators in the United States.
The ten-year Treasury yield declined 1.4 bps to 4.6708%, while the two-year Treasury yield fell 2.1 bps to 4.2744%.
The German ten-year yield fell by 1.4 bp to 2.472%, that of the two-year rate lost 2.6 bp to 2.18%.
CHANGES
The dollar remains near its highest level since November 2022, supported by the latest US economic data which suggests the Fed will keep rates high for longer.
The dollar gained 0.1% against a basket of reference currencies, the euro rose 0.05% to $1.0344, and the pound sterling strengthened by 0.07% to $1.2482.
In Asia, the yen advanced 0.04% to 157.95 yen per dollar, the Australian dollar rose 0.03% to 0.6231 dollars.
OIL
Crude prices are increasing, supported by the latest economic data published in the United States which suggest that the American economy remains robust, while production in OPEC countries fell in December after two months of increases.
Brent rose 0.45% to $77.4 per barrel, American light crude (West Texas Intermediate, WTI) rose 0.57% to $74.67.
(Written by Corentin Chappron, edited by Zhifan Liu)
