The old Paris Stock Exchange
The main European stock markets are expected to fall sharply on Thursday at the opening after the decision of the American Federal Reserve (Fed) on Wednesday and the revision of its monetary easing projections for 2025.
Futures contracts suggest an opening down 1.48% for the Parisian CAC 40, compared to a decline of 1.14% for the FTSE in London, a decline of 1.32% for the Dax in Frankfurt, and a decline by 1.61% for the EuroStoxx 50.
Europe is taking the hit after indications from the Fed’s monetary policy committee on Wednesday evening which led American indices to their worst daily fall since this summer.
If the Fed lowered its rates by 25 basis points as expected, bringing the federal funds target to a range of 4.25 to 4.50%, it also suggested that the pace of monetary easing would slow down. .
In their new projections, US central bank officials now forecast only two additional reductions of a quarter of a percentage point by the end of 2025 compared to a previous forecast of four reductions.
Jerome Powell recalled that the pace of future declines would depend on the reduction of inflation and the maintenance of a strong labor market. However, the Fed’s inflation projections for 2025 now stand at 2.5% compared to 2.1% previously, and indicate an unemployment rate below 4.3%.
The neutral rate is now estimated at 3% by these officials compared to 2.5% previously.
Investors, who continue to evaluate the consequences of the policies desired by US President-elect Donald Trump, will thus scrutinize the indicators expected during the session across the Atlantic with all the more attention.
In addition to the monetary policy choices of the United States, Europe continues to face political uncertainties in its two main economies.
VALUES TO FOLLOW:
A WALL STREET
The New York Stock Exchange ended sharply lower on Wednesday, seeing initial gains erased after the press release from the American Federal Reserve (Fed) and the speech of Jerome Powell.
The Dow Jones index lost 2.58%, or 1,123.03 points, to 42,326.87 points.
The broader S&P-500 lost 178.45 points, or 2.95%, to 5,872.16 points.
The Nasdaq Composite fell 716.37 points (3.56%) to 19,392.69 points.
We have to go back to August 5 to find a greater fall for the Dow Jones and the S&P-500, and even to July 24 for the Nasdaq.
IN ASIA
The Tokyo Stock Exchange closed lower after the decision of the Central Bank of Japan not to increase its rates and before the speech of Governor Kazuo Ueda who could give indications as to the rate of increase expected in the coming months. The Chinese markets are moving in sharp decline in line with Wall Street.
The Tokyo Stock Exchange ended down 0.69%.
The Hong Kong Hang Seng index declined by 0.54%, the Shanghai SSE Composite fell by 0.46%, the CSI 300 decreased by 0.01%.
RATE
US monetary easing is boosting Treasury bonds.
The yield on the ten-year Treasury rose 2.4 bps to 4.522%, while the yield on the two-year security dropped 1.3 bps to 4.3419%.
The two-year German Bund yield rises 5 basis points to 2.085%.
CHANGES
The dollar continues to approach a two-year high after the rate cut decided by the Fed on Wednesday, while the Yen, on the contrary, approaches a one-month low after the BoJ maintained its short-term key rate unchanged.
The dollar gained 0.07% against a basket of reference currencies, the euro rose by 0.41% to $1.0394, and the pound sterling strengthened by 0.2% to $1.2598.
In Asia, the yen declined by 0.98% to 156.32 yen per dollar, the Australian dollar rose by 0.27% to 0.6234 dollars.
OIL
The barrel is falling on Thursday following the Fed’s declarations concerning the pace of its rate cuts in 2025 and the potential consequences on global growth and therefore demand.
Brent fell 0.3% to $73.17 per barrel, American light crude (West Texas Intermediate, WTI) weakened 0.55% to $70.19.
(Written by Bertrand De Meyer, edited by Augustin Turpin)
