A new decline is expected in Europe at the beginning of the week

from Leticia Volga

PARIS (Reuters) – Major European stock markets are expected to fall on Monday at the opening, still burdened by concerns about global economic growth in the context of tightening monetary policy and the health crisis in China.

The first available figures indicate a decrease of 1.3% for Paris CAC 40, 1.31% for Dax in Frankfurt, 0.79% for FTSE in London and 1.44% for EuroStoxx 50.

The opening week will be revived, in particular, on Wednesday with the publication of monthly consumer price indicators in the United States, which will continue to inflame the debate over the rate of increase in Fed rates.

“Reducing the CPI would be somewhat comforting, but the acceleration will undoubtedly revive expectations of a rate increase of 75 basis points from the Fed,” – said analysts at ANZ Bank.

Concerns about the effects of quarantine in Shanghai on the Chinese and global economies are growing as authorities in the country’s economic capital are expected to maintain medical restrictions until the end of the month due to fears of a re-emergence of coronavirus infections. Coronavirus, several sources reported. .

Meanwhile, speculation that Russian President Vladimir Putin may formally declare war on Ukraine on Monday during celebrations in honor of Nazi Germany’s surrender to Allied forces is also expected to affect market sentiment.

VALUES TO BE TREATED:

ON VOL STREET

The New York Stock Exchange ended in the red on Friday due to rising bond yields and the prospect of a significant increase in interest rates by the Fed, supported by the publication of a reliable report on employment in the United States. [.NFR]

The Dow Jones fell 0.3% to 32,899.37 points, the Standard & Poor’s 500 lost 0.57% to 4,123.34 points, and the Nasdaq Composite fell 1.40% to 12,144.66 points.

The S&P-500 and Nasdaq indexes recorded the fifth consecutive week of unheard-of declines since 2011 for the first and since 2012 for the second.

In terms of prices, sporting goods manufacturer Under Armor fell 23.8% after announcing lower-than-expected earnings forecasts for the year due to high shipping costs and restrictions in China.

Futures are now forecast to decline by about 1% on Monday.

IN ASIA

After the Wall Street Nikkei lost 2.4% on the Tokyo Stock Exchange, investors are also worried about inflation and the tightening of monetary policy by the Fed.

The largest decline was in the JFE (-7.34%), as the metallurgical group did not set a financial target for the current financial year due to economic uncertainty.

In China, the Shanghai SSE Composite lost 0.16% and the CSI 300 0.96%, as concerns about the economic impact of health restrictions outweighed the trend.

On the trade front, exports grew in April at the lowest rate since June 2020 (+ 3.9% year on year), but slightly exceeded expectations, while imports remained stable.

EXCHANGE RATES / EXCHANGES

Expectations of a sharp rise in interest rates in the United States continue to affect the bond market, where the yield on ten-year US Treasury bills rose 1.5 basis points to 3.1487% after an 18-month peak of 3.1580%.

The dollar rose 0.4% against a basket of reference currencies, close to the nearly twenty-year high of the session.

“Changing interest rates in the United States is not the only support for the dollar … The risks of declining global growth on the part of Ukraine and China are of greater concern to Europe and Asia than to the United States,” NatWest Markets strategists said in a note. .

Thus, the euro fell to 1.0507 dollars, up 0.42%.

The yuan, for its part, fell to its lowest level since November 2018 against the dollar, while the retention period in Shanghai is likely to last until the end of the month.

OIL

The oil market is approaching equilibrium after G7 leaders announced on Sunday that they had agreed to impose new sanctions on Moscow, including by banning or phasing out Russian oil imports.

Brent rose 0.21% to $ 112.63 a barrel and US light oil (West Texas Intermediate, WTI) by 0.05% to $ 109.82.

(Inscription: Letizia Volga, edited by Mathieu Protar)