(Paris) The world stock markets are confident on Monday pending announcements from the American and European central banks, while the Federal Reserve may not raise its key rate, a first since March 2022.
European stock market indices rose modestly: 0.69% in Paris, 0.15% in London, 0.75% in Frankfurt, 0.68% in Milan. The Tokyo Stock Exchange saw similar swings, and Hong Kong and Shanghai ended nearly flat.
Wall Street is heading for a slightly higher open too, 0.13% for the Dow Jones and 0.50% for the NASDAQ.
The bond market was not very lively either, interest rates on sovereign debt stagnated, at 2.36% for the German 10-year bond and 3.75% for the American equivalent.
All investors’ attention is on Tuesday and Wednesday’s US Federal Reserve (Fed) meeting and Thursday’s European Central Bank (ECB) meeting.
The latest consumer price index figures for May in the United States will be scrutinized on Tuesday, in order to gauge the current price dynamics, with inflation still remaining strong in the world’s largest economy.
“If there are no major surprises on the inflation data front, the Federal Reserve should keep interest rates unchanged at this week’s monetary policy meeting,” said analyst Ipek Ozkardeskaya. Swissquote Bank.
However, even if no new increase in the Fed’s key rates is announced this week, several economists warn that the monetary institution could raise them again at the next meeting, at the end of July.
Finalto analyst Neil Wilson said the Fed doesn’t want the market to believe that rate cuts are coming soon, and Fed Chairman Jerome Powell will need to “speak tough language” to counter those hopes.
As for the ECB, it started its rate hike cycle later than the Fed and therefore still has “some way to go”, according to its chair Christine Lagarde.
The ECB should therefore raise its interest rates again, while signaling that it does not intend to stop there, even if inflation declines and if the euro zone has entered a recession.
The Bank of Japan is also meeting this week, Friday, and is expected to keep its key rates negative despite an acceleration in inflation.
The Swiss raw materials giant Glencore (0.44% in London) confirmed on Monday that it had made an offer to take over the coal activities of Teck Resources, a proposal that the Canadian group says it is studying “among others”.
A few minutes after the announcement of the death of the former head of the Italian government Silvio Berlusconi, the title of his group MediaForEurope (MFE, ex-Mediaset) jumped. Around 7:45 a.m. (Eastern time), it rose 3.12% on the Milan Stock Exchange, amid speculation about the future of Mr. Berlusconi’s empire and possible share sales envisaged by his heirs.
Interest rates on Italian government bonds fell slightly, a little more than the rest of European rates. That of ten-year debt was worth 4.05%, against 4.11% at the close on Friday.
The Swiss pharmaceutical giant Novartis (0.98% in Zurich) is strengthening in kidney disease by buying the American Chinook Therapeutics for a sum of up to 3.5 billion dollars (3.2 billion euros).
Oil prices are faltering, investors fearing that a possible Fed interest rate hike will weigh on economic activity and therefore demand for crude.
Around 7:45 a.m. (Eastern time), a barrel of Brent from the North Sea, for delivery in August, lost 2.07% to 73.24 dollars. Its American equivalent, a barrel of West Texas Intermediate (WTI) for delivery in July, yielded 2.42% to 68.47 dollars.
On the currency side, the euro gained 0.18% against the dollar, to 1.0768 dollars for one euro.
Bitcoin lost 0.66% to $25,960.
