Europe is expected to decline sharply to start a risky week

Mark Angran

PARIS (Reuters) – Major eurozone stock markets are expected to fall sharply on Monday after falling sharply on Wall Street on Friday and two days before the US Federal Reserve’s decision in a context still marked by tightening monetary policy. policies, slowing global growth, inflation and the war in Ukraine.

Index futures fall -1.12% for Dax in Frankfurt and -1.28% for EuroStoxx 50, while the CAC 40 in Paris could yield about 1.2% according to the first available destinations.

British markets will only open on Tuesday, a public holiday in the United Kingdom. Markets in China, India and several Southeast Asian countries are also closed.

Major European indexes rose on Friday for the third consecutive session before Wall Street posted its worst performance in nearly two years after a series of lower-than-expected results in the key high-tech sector and the announcement of a further acceleration of the PCE inflation index. , most reviewed by the Federal Reserve.

The economic news of the weekend is also not inspiring: the official Chinese PMI indexes released on Saturday point to a worsening decline in activity in both the manufacturing and services sectors in April as a result of healthcare constraints. the COVID-19 epidemic.

The Fed may raise its key interest rate by half a point on Wednesday and should clarify its intentions to reduce the balance. In general, the tone of its speech by President Jerome Powell may affect the evolution of markets in the short term.

“Investors now expect a rate increase of 50 basis points (basis points) at Wednesday’s meeting and … by 75 basis points in June, the first since 1994,” said John Plassar of Mirabaud Securities.

The Bank of England is meeting on Thursday and should continue the upward trend in interest rates, which is already observed in the context of accelerating price increases.

Meanwhile, the next session will be timed to the publication of the final PMI indices in the euro area and the US manufacturing ISM.

ON VOL STREET

On Friday, US stock markets held their worst session since 2020, as alarming inflation rates appeared in addition to the disappointing news from Amazon, one of the largest capitalizations on Wall Street.

The Dow Jones fell 2.77%, or 939.18 points, to 32,977.21, the Standard & Poor’s 500 lost 155.71 points (-3.63%) to 4,131.79, and the Nasdaq Composite fell 536. 42.43% (up to 536.42.4%).

Thus, the S&P 500 recorded the largest decline in a single session since June 2020, the Nasdaq – since September 2020.

Amazon fell 14.05% and Apple 3.66% the day after the release of their quarterly results.

April ended with a 13% drop in the Nasdaq, the worst monthly figure since the 2008 financial crisis.

Futures on the index so far predict a rebound of about 0.5% for the Dow and S&P 500 and 0.7% for the Nasdaq.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index rose 0.25% and the broader Topix 0.15% less than an hour after closing, as caution limited spreads before the three-day closing of Japan’s Golden Week, which will not allow Japanese investors to react hotly to events coming days.

Technology is suffering from a sharp drop in the Nasdaq on Friday, like Tokyo Electron, which is 0.67%, Advantest (-3.89%) or Fanuc (-1.83%).

EXCHANGES / COURSE

The dollar is rising again against other major currencies (+ 0.50%) after gaining profit on Friday for the last session of April, which ended with an increase of 4.7%, which is the best monthly figure since January 2015.

The euro fell (-0.25%), but still remains above $ 1.05.

OIL

The oil market is retreating due to declining trade due to the lack of many Asian investors, concerns about slowing growth in China, the world’s largest importer, which again outweighs the risk of a European Union embargo on Russian oil.

Brent fell 1.1% to $ 105.96 a barrel and US West Light Intermediate (WTI) 1.01% to the dollar.

(Written by Mark Angran)