EUROPEAN WOMEN EXPECTED AT OPENING
by Laetitia Volga
PARIS (Reuters) – Major European stock markets are expected to fall as they open Monday, buoyed by concerns over global economic growth amid monetary policy tightening and China’s health crisis.
The first available indications point to a decline of 1.3% for the Paris CAC 40, 1.31% for the Dax in Frankfurt, 0.79% for the FTSE in London and 1.44% for the EuroStoxx 50.
The week that kicks off will be especially animated on Wednesday by the release of monthly consumer price data in the United States, which are sure to fuel debates about the pace of Fed rate hikes.
“A moderation in the CPI would be somewhat reassuring, but an acceleration would undoubtedly revive expectations of a 75 basis point rate hike from the Fed,” ANZ Bank analysts said.
Fears of the impact of the lockdown in Shanghai on the Chinese and global economy are mounting as authorities in the country’s economic capital are expected to maintain health restrictions until the end of the month amid fears of an uptick in coronavirus infections . †
Meanwhile, speculation that Russian President Vladimir Putin will officially declare war on Ukraine on Monday during celebrations commemorating Nazi Germany’s surrender to Allied forces is expected to affect market sentiment.
VALUES TO FOLLOW:
AT WALL STREET
The New York Stock Exchange ended in the red on Friday, penalized by rising bond yields and the prospect of significant rate hikes by the Fed, bolstered by the release of a solid US employment report. [.NFR]
The Dow Jones index 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 the Nasdaq registered their fifth consecutive week of decline, the first since 2011 unheard of and their second since 2012.
By value, sporting goods maker Under Armor fell 23.8% after reporting a full-year profit forecast that was below expectations due to higher shipping costs and restrictions in China.
Futures are currently pointing to a decline of about 1% on Monday.
IN ASIA
In the wake of Wall Street, the Nikkei on the Tokyo Stock Exchange lost 2.4%, as investors also worried about inflation and monetary tightening by the Fed.
The largest decrease went to JFE (-7.34%), the steel group that has not given a financial target for the current financial year due to economic uncertainties.
In China, the Shanghai SSE Composite lost 0.16% and the CSI 300 0.96% as concerns about the economic impact of health restrictions weighed on the trend.
On the trade front, exports grew in April at their slowest pace since June 2020 (+3.9% yoy), but slightly exceeded expectations, while imports remained stable.
RATES/EXCHANGE
Expectations of significant rate hikes in the United States continue to weigh on the bond market, where 10-year US Treasury yields rise 1.5 basis points to 3,1487% after an 18-month peak of 3,158%.
Against a basket of reference currencies, the dollar gained 0.4%, close to a nearly twenty-year high reached in session.
“Movements in US interest rates are not the only support for the dollar… Downside risks to global growth from Ukraine and China are more of a concern for Europe and Asia than for the United States,” NatWest Markets strategists said in a note. . †
The euro thus fell to $1.0507, a fall of 0.42%.
The yuan, in turn, fell to its lowest point since November 2018 against the greenback, while the Shanghai lockdown is likely to last through the end of the month.
OIL
The oil market is nearing equilibrium after G7 leaders announced on Sunday that they agreed to impose new sanctions on Moscow, notably by banning or phasing out their imports of Russian oil.
Brent gained 0.21% to $112.63 a barrel and US light crude (West Texas Intermediate, WTI) 0.05% to $109.82.
(Written by Laetitia Volga, edited by Matthieu Protard)