A trader works at CMC Markets, London
by Claude Chendjou
The main European stock markets, currently at record levels, are expected to fall slightly on Monday in a consolidation movement after a week of euphoria marked by announcements from major central banks, which have opted for a pause in the rise in their interest rates. interest and raised hopes of a drop in the cost of credit next year.
According to the first available indications, the Parisian CAC 40, which closed Friday at a record level of 7,596.91 points, should lose 0.16% at the opening. The Dax in Frankfurt, which recorded a historic peak at 16,752.23 points during the session on Thursday, could fall by 0.18%. The FTSE 100 in London is expected to drop 0.10%. The EuroStoxx 50 index is expected to fall by 0.24%.
After the decisions of the European Central Bank (ECB), the Bank of England (BoE), the Swiss National Bank (SNB) and especially the American Federal Reserve (Fed), the market will take note of the announcements from the Bank of Japan (BoJ), which could give clues on the evolution of its policy.
While the Fed particularly reinforced last week the hope of a reduction in the cost of borrowing next year, the publication of inflation figures on Tuesday in the euro zone, Wednesday in Great Britain and Friday in the United States will constitute a test of the enthusiasm of the markets and the solidity of the Christmas rally.
The Stoxx 600 closed Friday by recording a fifth consecutive week of gains, its longest streak in this direction since April against a backdrop of declining easing in the European bond compartment.
Deutsche Bank expects the ECB to cut rates by 150 basis points by the end of 2024, while Barclays forecasts an initial cut of 25 basis points in April, followed by further cuts at each meeting until January 2025 Regarding the BoE, the market expects a rate cut of 113 basis points next year.
As for today’s indicator, the only major element is the Ifo business climate index in Germany, expected to improve in December.
A WALL STREET
The New York Stock Exchange ended mixed on Friday and the dollar rebounded, investors catching their breath at the end of a week full of monetary policy decisions and economic data.
The Dow Jones index gained 0.15%, or 56.81 points, to 37,305.16 points. The broader Standard & Poor’s 500 lost 0.36 points, or 0.01%, to 4,719.19 points. The Nasdaq Composite advanced 52.36 points (0.35%) to 14,813.92.
Euphoria over the Fed was dampened somewhat after New York Federal Reserve President John Williams dampened the prospect of an imminent interest rate cut.
The three main US stock indexes oscillated for most of the session but recorded their seventh consecutive weekly increase.
This is the longest series of weekly gains for the S&P 500 since September 2017, and for the Dow since late 2018-early 2019.
Separately, economic data released Friday reported a recovery in business activity in the United States, but also showed that the manufacturing sector continued to struggle.
In terms of values, Costco Wholesale gained 2.85% after publishing a quarterly turnover higher than consensus.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index lost 0.61% to 32,770.24 points, partly penalized by the strengthening of the yen, while the broader Topix dropped 0.66% to 2,316.86 points. , at the closing.
The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) fell 0.50%
In China, the Shanghai SSE Composite lost 0.33%, entering a sixth consecutive week in the red at this stage, while the CSI 300 fell by 0.31%.
EXCHANGES/RATES
The dollar fell further, by 0.13%, against a basket of reference currencies, after recording its biggest weekly decline in a month over the past week.
The euro advanced 0.16%, to $1.0911, while the pound sterling stood at $1.2688 (+0.1%).
In the bond market, the yield on ten-year US Treasury bonds fell by around 2.5 basis points, to 3.9053%, after a decline of 33 points last week, the largest since the start of 2020.
OIL
The oil market rose on Monday after hitting a five-month low last week linked to doubts about a coordinated drop in production by OPEC+ members.
Brent advanced 0.63% to $77.03 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.70% to $71.93.
(Writing by Claude Chendjou, edited by Kate Entringer)