Europe is ending in the red, the economy is worried about the Fed

PARIS (Reuters) – European stock markets fell on Monday amid uncertainty over economic growth, as in a few days there will be a new tightening of monetary policy of the Federal Reserve.

In Paris, the CAC 40 fell 1.66% to 6,425.61 points, and the German Dax lost 1.13%. UK markets remained closed over the weekend in the UK.

The EuroStoxx 50 index fell 1.85%, the FTSEurofirst 300 fell 1.48% and the Stoxx 600 fell 1.46%.

At the time of the closure in Europe, Wall Street was moving without a clear direction after its worst session since 2020 on Friday: the Dow Jones fell 0.35%, the S&P 500 0.24% and the Nasdaq Composite 0 , 2%.

The month of May started with a bad start for stocks: a significant decline in activity in services and industry in China was announced over the weekend, and then on Monday there was a sudden drop in retail sales in Germany, a slowdown in growth. production activity in the euro area and the decline of the ISM production index in the US to its lowest level since July 2020.

This pile of bad news at the macroeconomic level comes at a time when major central banks are tightening their monetary policies to limit inflationary pressures intensified by the war in Ukraine.

The Federal Open Market Committee (FOMC) of the Federal Reserve will begin a two-day debate on Tuesday, after which the agency may announce a half-point rate increase.

If markets expect this element, investors are wondering what the Fed can decide for future meetings, as well as its balance sheet of about $ 9 trillion.

The Bank of England will announce its monetary policy on Thursday and may announce a rate increase of 25 basis points.

VALUES IN EUROPE

The European energy sector fell 2.26% due to falling oil prices.

Actions related to cars and luxury items have been affected by Chinese influence. Hermes fell 2.82%.

Bayer, Continental, BASF and Mercedes-Benz, which traded without dividends, lost 4.32% to 7.27%.

RATE

Yields on US Treasury bonds rose sharply on the eve of the Fed meeting, which, if you do not take any surprises, should lead to another increase in rates.

In ten years, it has grown by more than ten basis points to 2.9924% after the peak since December 2018 at 2.994%.

After that, its German equivalent closed slightly higher by 0.965%.

CHANGES

The dollar will benefit from expectations of a faster tightening of monetary policy in the United States, concerns about the war in Ukraine and the fall of the euro after mixed PMI indices.

Its index, which measures its evolution against a basket of reference currencies, rose 0.58% and the euro lost 0.25% to $ 1.0515.

OIL

Oil prices are almost stable, torn between fears of a slowdown in China’s economy and cuts in supplies from Russia following a possible embargo by the European Union.

Germany is ready to support a European embargo on Russian oil, its economy minister said, adding that the new sanctions should take into account the dependence of other European Union countries on Russian supplies.

Brent lost 0.16% to $ 106.97 per barrel, and US light crude oil (West Texas Intermediate, WTI) lost 0.11% to $ 104.58

(Inscription: Letizia Volga, edited by Mathieu Protar)