Stock markets: Europe set to open higher; expectations of a Fed rate rise are easing
And the pressure on the tech sector is easing
(Il Sole 24 Ore Radiocor) - European stock markets (Euro Stoxx futures +0.6 per cent) are set to open higher, following a resurgence in buying on Wall Street and in Asia (where the Nikkei is up nearly 2 per cent). Against this backdrop, futures contracts in Paris (+0.5%), Frankfurt (+0.4%), Madrid (+0.2%) and Amsterdam (+0.1%) are trading higher, whilst those in Milan are struggling to move away from the break-even point. Meanwhile, futures in London are down by 0.16 per cent.
The markets are therefore attempting to put behind them the sell-off that hit chip and AI-related shares the day before. “It looks as though we are seeing a technical rebound, with the market as a whole stabilising somewhat,” explain analysts at Toyo Securities, although they warn that “volatility could remain relatively high next week” as the earnings season continues. Investors were also reassured yesterday by comments from Fed Chairman Kevin Warsh. During the International Monetary Fund meeting in Bangkok, the head of the US central bank refrained from advocating the need for a more restrictive monetary policy, despite US inflation figures published yesterday exceeding estimates. “I do not pre-empt meeting decisions,” said Warsh. “I do not think it is appropriate to say now what I might do during the meetings we will hold,” he added. Although these remarks do not provide precise guidance, they have dampened expectations of a rate rise in October. Following the speech, market participants reduced their bets on a Fed rate rise this month to 15 per cent, down from over 25 per cent on Thursday.
Turning to the equity market, all eyes on the Milan Stock Exchange are on Unicredit, after it received the ECB’s go-ahead yesterday to take a controlling stake in Commerzbank.
In the currency markets, the euro is recovering to 1.1232 dollars (1.1203 at yesterday’s close). The single currency is also trading at 177.27 yen (up from 176.9), whilst the dollar/yen cross is trading at around 157.83 dollars (158). On the energy front, Brent crude is trading at $105.19 per barrel (-0.71 per cent), whilst WTI is at $97 (-0.91 per cent). Natural gas is down 0.6% at 85.87 euros per megawatt-hour. Gold is flat at 4,173 dollars per ounce in the spot contract (+0.09%).
