Emergence in Europe, fears of inflation are growing

from Leticia Volga

PARIS (Reuters) – Major European stock markets are expected to fall on Monday as recent inflation in the United States has revived fears of an aggressive tightening of monetary policy by the Federal Reserve, while the health situation in Beijing is mounting uncertainty for the world. growth.

The first available figures show a decrease of 1.45% for Paris CAC 40, 1.46% for Dax in Frankfurt, 0.62% for FTSE in London and 1.47% for EuroStoxx 50.

Thus, the trend should be negative again in Europe, which is still affected by more-than-expected consumer price inflation in the United States, as the Federal Reserve announced monetary policy on Wednesday.

Investors fear that the acceleration of inflation to 8.6% during the year in the United States, the highest level since December 1981, will force the US Federal Reserve to tighten its monetary policy with the risk of stopping the economy.

Markets estimate an 80% probability of a Fed rate increase of half a point on Wednesday and a 20% probability of an increase of 75 basis points.

The Bank of England, which meets with its committee on Thursday, is also due to raise its base rate for the fifth time since December.

Concerns about the global economy are exacerbated by the COVID-19 crisis in China. Beijing’s most populous district, Chaoyang, announced several large-scale test campaigns Sunday to stop the spread of the coronavirus.

VALUES TO BE TREATED:

ON VOL STREET

The New York Stock Exchange ended its fall on Friday after the publication of statistics confirming the intensity of inflation in the United States.

The Dow Jones fell 2.73% to 31,392.79 points, the S&P-500 lost 2.91% to 3,900.73 points, and the Nasdaq Composite fell 3.52% to 11,340.02 points.

During the week, S&P lost 5.06%, Dow – 4.58%, and Nasdaq – 5.60%, thus becoming the worst week since January 21.

Futures are now down 1.07% to 1.79% on the open market.

IN ASIA

Falling on Wall Street on Friday affected a trend in Asia, where Nikkei on the Japanese Stock Exchange lost 2.97%, falling below 27,000 points for the first time in two weeks.

In China, the Shanghai SSE Composite lost 0.98% and the CSI 300 lost 1.23%.

RATE

Sales in the US bond market continue for the fourth consecutive session after inflation rose, prompting higher yields.

Ten-year Treasury bonds rose two basis points to 3.1762% after a five-week peak of 3.202%. The two-year figure rose by ten basis points to 3.1493%, reaching its highest level since December 2007.

Thus, the gap between the two profitability, which is considered a good barometer of growth and inflation expectations, is approaching the negative zone.

CHANGES

The dollar rose 0.34% against a basket of reference currencies, peaking at 135.17 against the yen since 1998.

“Rising foreign profitability and energy prices, along with constant reports from the Bank of Japan, have pushed the dollar / yen to more than a 20-year high,” Barclays analysts said.

OIL

The oil market is trading in the red, as the surge in COVID-19 in Beijing has shattered hopes for a speedy recovery in China’s oil demand amid concerns about the global economic outlook and rising inflation in the United States.

Brent fell 1.57% to $ 120.1 a barrel and US West Light Intermediate (WTI) fell 1.59% to $ 118.75.

(Inscription: Letizia Volga, edited by Bertrand Busi)