Trading on the Frankfurt Stock Exchange, in Frankfurt
by Claude Chendjou
The main European stock markets are expected on a cautious note on Thursday for a session marked by numerous macroeconomic data including an inflation indicator in the euro zone, as well as indices of services activity in Europe and the United States.
According to the first available indications, the Parisian CAC 40 should lose 0.43% at the opening. The Dax in Frankfurt could fall by 0.40%. The FTSE 100 in London is seen close to balance (+0.08%). The EuroStoxx 50 index is expected to fall by 0.36% and the Stoxx 600 down by 0.25%.
Financial markets have been on the defensive since the start of the week due to worsening tensions in the Middle East after Iran’s missile attacks on Israel on Tuesday. In the latest developments in the regional conflict, Israel bombed central Beirut in the early hours of Thursday, according to Lebanese health officials.
In addition to these tensions, investors must analyze the impact of the economic indicators expected this Thursday.
While the contraction in the manufacturing sector worsened in September in Europe, investors will be attentive to the final figures for the services sector expected from 07:50 GMT for the main countries of the Old Continent. In the United States, the monthly ISM for services is expected at 2:00 p.m. GMT while the manufacturing indicator appeared stable in September on Tuesday.
In Europe, producer prices (PPI) for the month of August in the euro zone are forecast at 09:00 GMT while the consumer price index (CPI) in the bloc fell below the 2 mark in September % for the first time since mid-2021, strengthening the case for further rate cuts from the European Central Bank (ECB) following June and September easing.
On the stock market in Europe, safe haven assets should remain at high levels, while the stress on the dollar, gold or American sovereign bonds does not subside. Raw materials and values linked to Defense should continue to be sought after.
A WALL STREET
The New York Stock Exchange ended up on Wednesday, its main indices having however progressed marginally, while a certain nervousness dominated the session against a backdrop of escalation of the conflict in the Middle East.
The Dow Jones index gained 0.09%, or 39.55 points, to 42,196.52 points.
The broader S&P-500 gained 0.79 points, or 0.01%, to 5,709.54 points.
The Nasdaq Composite advanced 14.76 points (0.08%) to 17,925.12 points.
On the stock side, Nvidia’s 1.6% increase contributed to gains in the technology sector of the S&P-500.
Nike fell 6.8% after withdrawing its annual revenue forecast and Tesla lost 3.5% following lower-than-expected third-quarter vehicle deliveries.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index ended with a gain of 1.97% to 38,552.06 points, supported by the weakness of the yen which favors export values. The broader Topix gained 1.20% to 2,683.71 points.
Japan’s new Prime Minister Shigeru Ishiba said his country was not in an environment conducive to another rate hike after a meeting on Wednesday with Bank of Japan (BoJ) Governor Kazuo Ueda.
BoJ board member Asahi Noguchi said at a press conference on Thursday that the central bank would raise rates cautiously.
These comments, considered accommodating, allowed Sony Group and Toyota Motor to progress by 1.07% and 1.25% respectively.
The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) lost 1%, largely penalized by the Hang Seng index (-1.15%) in Hong Kong.
Markets in mainland China remain closed due to public holidays.
VALUES TO FOLLOW IN EUROPE:
CHANGES
The dollar reached its highest level in more than six weeks against the yen on Thursday, the strength of the American job market (ADP survey) reinforcing expectations of an acceleration in the reduction of key rates by the American Federal Reserve ( Fed). The Japanese currency is also affected by the comments of the new Prime Minister, Shigeru Ishiba.
The dollar gained 0.12% to 146.65 yen after climbing to 147.24 yen for the first time since August 20.
Against a basket of reference currencies, the American currency gains around 0.16%, to around 102 points.
The euro lost 0.13% to $1.1031 while traders now estimate a 95% probability of a quarter-point ECB rate cut on October 17, according to LSEG data.
Sterling trades at $1.3174 (-0.70%) after Bank of England (BoE) Governor Andrew Bailey said the central bank could become “a little more aggressive” on rate cuts if inflation continues to fall.
Currencies sensitive to geopolitical risk are also under pressure following the Iranian offensive in Israel which has raised fears of the outbreak of all-out war.
RATE
The yield on ten-year US Treasury bonds is practically stable, at 3.7942%, after an increase of four basis points the day before. However, it is on a series of five consecutive months of monthly decline in anticipation of Fed rate reductions.
The yield on the German Bund of the same maturity is stagnating, at 2.104%, after an increase of 5.1 points the day before.
OIL
Oil prices rise on Thursday with fears of an extension of the conflict in the Middle East likely to disrupt supplies.
Brent rose 0.96% to $74.86 per barrel and American light crude (West Texas Intermediate, WTI) rose 1.44% to $71.11.
*first estimate
(Written by Claude Chendjou, edited by Augustin Turpin and Blandine Hénault)