Wall Street pulls European markets higher ahead of Fed chief’s speech

The stock markets of the old continent ended a mixed session slightly higher, with the exception of Paris, which ended almost balanced (-0.08%).

Global stock markets were generally higher in Wall Street’s wake on Thursday, on the eve of the Federal Reserve Board (Fed) Governor’s speech at the central bankers’ summit in Jackson Hole in the United States.

European markets ended a mixed session slightly higher, with the exception of Paris, which ended close to breakeven (-0.08%).

Frankfurt Stock Exchange gained 0.39%, London 0.11% and Milan 0.10%. The Stoxx Europe 600 Index, which represents 600 of the major European market capitalisations, gained 0.30%. In Zurich, the SMI increased by 0.46%.

After a slight gain the previous day, the New York Stock Exchange continued the move markets had been eagerly anticipating since the beginning of the week on Thursday, the first day of the Jackson Hole central bank conference.

At around 16:00 GMT, the Dow Jones was up 0.05%, the broader S&P 500 Index was up 0.52% and the Nasdaq was up 0.73%.

“Awaiting clarification on what to do, the market has a big question mark on Jerome Powell’s speech tomorrow,” which is expected at 14:00 GMT, explains Raphaël Thuin, Head of Capital Markets Strategies at Tikehau Capital.

While central banks face the dilemma of how far they can raise interest rates to fight inflation without penalizing economic activity too much, Mr Thuin said investors are asking the same question.

To reassure the Fed’s credibility in the eyes of the market: “Will Jerome Powell try more to illustrate his intransigence against inflation? Or will he be inclined to acknowledge certain improvements in the economy?” summarizes the Tikehau Capital expert.

The daily indicators were also quite positive. US gross domestic product (GDP) shrank somewhat less than initially announced in the second quarter, namely by 0.6% instead of 0.9%. In Germany, GDP was revised slightly upwards, with growth of 0.1% instead of stability.

However, Mr Thuin warned of “the risk of volatility” in the markets surrounding Friday’s Fed chief’s speech.

According to him, the macroeconomic context between “the looming energy crisis in Europe” and “economic worries in China” remains characterized by “a strong potential for recession that the market is not prepared for today”, although he is still betting “heavy” on one forthcoming easing of the Fed’s interest rate hike.

In Europe, minutes of the European Central Bank’s (ECB) meeting on Thursday showed that members of the Governing Council decided to adopt a case-by-case communication on developments in key interest rates. .

In July, the ECB decided to raise it by 50 basis points for the first time since 2011.

European gas nears its record

In Europe, “gas prices are weighing on markets while fears of an energy crisis this winter are growing,” says Raphaël Thuin.

The price of European natural gas on the reference market, the Dutch TTF, reached 318 euros per megawatt hour at 09:20 GMT and remained at 313,585 euros at 15:50 GMT (+7.34%), fueled by upcoming Russian supply disruptions. The historic record is 345 euros per megawatt hour.

The power of port energy

British energy group Harbor Energy rose 10% in London after results beat analysts’ expectations, with profit after tax approaching $1 billion and a 50% increase in its share buyback program.

On the side of oil and currencies

The barrel of North Sea Brent for October delivery was at $101.23 (+0.02%) as of 15:50 GMT and the US WTI fell 0.25% to $94.65 on the same maturity .

The euro briefly rose above parity against the dollar on Thursday morning. As of 15:50 GMT, it was steady against the greenback (-0.01%) at $0.9966.

Bitcoin lost 0.50% to $21,586.

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