Sharp decline in shares along with rising profitability

from Leticia Volga

PARIS (Reuters) – Wall Street is expected to fall at the opening, European stocks are expected to fall on Monday in the middle of the session, and bond yields will rise due to fears of inflation and tightening central bank policies.

Futures on the index show a decline of 1.67% for the Dow Jones, 2.11% for the Standard & Poor’s-500 and 2.69% for the Nasdaq. In Paris, CAC 40 lost 2.12% to 6125.57 around 11:30 GMT. Dax lost 1.78% in Frankfurt and FTSE lost 1.92% in London.

The pan-European FTSEurofirst 300 fell 2.04%, the EuroStoxx 50 fell 2.19% and the Stoxx 600 fell 2.11%.

The prospect of further rising interest rates to combat inflation is hurting global stock and bond markets, where sovereign yields have reached new highs.

In addition to tightening monetary conditions, the indirect effects of the war in Ukraine and the strengthening of policies to combat COVID-19 in China reinforce fears of a sharp slowdown in the world economy.

The Sentix index of eurozone investor sentiment is at its lowest level since June 2020, at -22.6 in May, falling for the third month in a row as the impact of the crisis in Ukraine on the economy becomes increasingly clear.

VALUES IN EUROPE

All major sectors of the European rating are in the red, and among the largest declines – basic resources (-4.11%) and high technology (-3.65%).

The first is driven by a 7% drop in iron ore prices in China due to concerns about demand, and the second is weakened by bond yields.

In Paris, Atos lost 4.63% and ArcelorMittal – 2.96%. In London, the mining groups Rio Tinto, Glencore and Anglo American gave from 4.73% to 5.63%.

Infineon fell 4.78% after a “long-awaited” increase in its annual turnover, according to Jeffries.

RATE

The yield on ten-year US government bonds increased by almost five basis points to 3.1746% after a high level from November 2018 at 3.203%.

Its German equivalent is also progressing, allowing it to peak at 1.189% since August 2014.

Faced with galloping inflation, markets expect the European Central Bank to start raising its rates this year.

Board member Robert Holtzmann considers it appropriate for the ECB to make two or three rate hikes, he said in an interview published on Saturday.

Money markets expect the ECB’s deposit rate to increase by almost 95 basis points by the end of the year.

CHANGES

The dollar has risen due to the resumption of Treasury profitability and fears of COVID-19 in China. In relation to the basket of international currencies, it rose by 0.17% and recorded a peak in almost twenty years in the session.

During the session, the euro fell 0.55% to $ 1.0493, after which it stabilized around 1.054. Sterling reached its lowest level in almost two years against the dollar at 1.2258.

The dry yuan has fallen to its lowest level since October 2020 after Chinese trade data confirmed market concerns about the impact of quarantine on the economy: exports grew at their lowest level since April 2020 (+ 3.9% year on year), while imports remained . stable.

OIL

Oil prices are falling sharply due to the strengthening dollar and concerns about demand in China.

Brent fell 2.27% to $ 109.84 a barrel and US light oil (West Texas Intermediate, WTI) fell 2.46% to $ 107.07.

(Inscription: Leticia Volga, edited by Kate Entringer)