After the Easter weekend, the European stock markets are definitely on the rise. For their part, investors are cautiously optimistic about central bank interest rate hikes, pending the Fed’s May policy meeting.
Easter bells may be heralding good news. After the long weekend, the main European stock markets are expected to rise on Tuesday.
At 10:30 a.m. Tuesday, the CAC 40 was up 0.78% at the opening after four days of closure on the Paris Bourse. The Dax in Frankfurt was up 0.53% and the FTSE 100 in London up 0.43%. The EuroStoxx 50 index gained 0.63%.
According to CME Group’s FedWatch barometer, investors expect the U.S. Federal Reserve (Fed) to raise rates by another 25 basis points after its next policy meeting on May 2 and 3.
However, Gary Ng, an economist at Natixis Corporate and Investment Bank, said the hike is less than what the market had previously anticipated. “Investors are more optimistic about the end of the rate cycle … we’re already at the top (of rates), that’s really the main driver of this oscillation we’re seeing right now”, he said.
The release of U.S. consumer and producer prices on Wednesday and Thursday will provide further evidence on inflation trends.
Luxury goods results imminent
In addition to questions about monetary policy, there are also questions about corporate financial results due this week, especially in the luxury goods sector. LVMH will open the ball on Wednesday, followed by Hermès on Thursday, while the big American banks such as JPMorgan Chase, Citigroup and Wells Fargo are expected on Friday.
According to the Reuters consensus, Eurozone retail sales, due this Tuesday at 09:00 GMT, are expected to fall by 0.8% over one month and 3.5% over one year.
The semiconductor sector in Europe is also worth watching. Samsung announced Friday evening that it expected a 96% drop in operating profit for the period January-March.
Caution Across the Atlantic
On Friday, the U.S. jobs report showed job creation at a steady pace in March. The U.S. Department of Labor announced that the U.S. economy had created 236,000 non-farm jobs last month, while the February figure was revised upward to 326,000 from 311,000 initially reported. The unemployment rate fell to 3.5% from 3.6% the previous month.
The New York Stock Exchange finished mixed on Monday. The Dow Jones Industrial Average gained 0.30 percent to 33,586.52 points. The S&P-500 gained 0.10 percent to 4,109.11 points, while the Nasdaq Composite fell 0.03 percent to 12,084.36 points.
On the stock side, semiconductor makers Micron Technology and Western Digital rose 8% and 8.2% after Samsung Electronics announced it would cut its chip production.
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Featured photo : © Wikimedia Commons
