Paris (Reuters) – Wall Street is expected to rise on Thursday while Europe is up in mid-session trading after the U.S. Federal Reserve cut its interest rate more than expected.
New York index futures suggest Wall Street will open in the green, with the Dow Jones up 1.09%, while the Standard & Poor’s 500 is up 1.51% and the Nasdaq is up 2%.
In Paris, the CAC 40 rose by 1.94% to 7,588.96 points at around 10:14 GMT. The Dax in Frankfurt strengthened by 1.37%, while the FTSE in London rose by 1.15%.
The pan-European FTSEurofirst 300 index gained 1.31%, the EuroStoxx 50 gained 1.72% and the Stoxx 600 grew by 1.3%.
Markets are welcoming the Fed’s latest decision, preferring to read the 50 basis point cut decided on Wednesday as an assurance of a “soft landing” for the US economy rather than a concern from the central bank about a potential economic recession.
Fed Chairman Jerome Powell stressed the resilience of the labor market, which he said was close to full employment, and added that the Fed was not behind on the state of the economy.
“Recognizing that its monetary policy is much too restrictive now that the balance of risks has shifted from inflation to unemployment, the Fed yesterday began a cycle of lowering key rates,” said Bruno Cavalier, chief economist at Oddo BHF.
“The convergence towards a monetary neutrality zone is faster than initially anticipated by the Fed, which helps to rule out a recession scenario,” adds the economist.
Markets are pricing in 71 basis points of rate cuts by December, a figure higher than the Fed’s projections, which expect two more 25 basis point cuts this year.
The Bank of England is expected to keep rates unchanged on Thursday, with the institution’s policy decision due at 1100 GMT. The Bank of Japan will announce its rate decision on Friday.
VALUES TO FOLLOW ON WALL STREET
Alphabet offered this year to sell its advertising marketplace AdX to end a European Union lawsuit, but the bloc dismissed the proposal as insufficient, two people familiar with the matter said Wednesday.
Dell Technologies on Thursday reported a quarterly dividend of $0.445 per common share.
Campari rose 7.8% after its main shareholder announced it would buy up to €100 million of additional shares in the group. The group’s performance supported other wine and spirits groups, with Pernod Ricard and Rémy Cointreau gaining 3.81% and 5.16% respectively. Air France-KLM gained 5.16% after Exane BNP Paribas raised its recommendation on the group to “neutral”. Ocado gained 6.69% after Ocado Retail, its joint venture with Marks & Spencer, raised its financial forecast for the 2023-2024 financial year. MFE-MediaForEurope, the commercial broadcaster controlled by the Berlusconi family, said on Thursday that its advertising sales are expected to beat forecasts in the first nine months of the year and are up 10.18%.
RATE
Yields are digesting the latest Fed statements as the Bank of Japan is set to make a rate decision on Friday.
The yield on the German ten-year rate rose by 1.3 bp to 2.204%, while that of the two-year rate was stable at 2.257%.
The 10-year Treasury yield rose 1.7 bps to 3.7037%, while the two-year yield dropped 1.1 bps to 3.5918%.
CHANGES
Euro and pound strengthen against dollar after Fed cuts rate more than expected.
The dollar fell 0.04% against a basket of benchmark currencies, the euro rose 0.49% to $1.1173, and the pound strengthened 0.48% to $1.3275.
OIL
Crude prices are rising following the Fed’s rate decision, which is likely to support demand in the United States, and geopolitical tensions in the Middle East.
Brent rose 1.06% to $74.43 per barrel and US light crude (West Texas Intermediate, WTI) rose 0.89% to $71.54.
(Written by Corentin Chappron, edited by Blandine Hénault)
by CORENTIN CHAPPRON
