EUROPEAN SCHOLARSHIPS DEVELOPING IN MID-SESSION DISORDER
by Laetitia Volga
PARIS (Reuters) – Wall Street is expected to be in the red as European stock markets move in disarray mid-session on Monday after the highest recorded by benchmark government bond yields, which distract investors from tech stocks but benefit from banks.
Index futures point to a 0.06% decline for the Dow Jones, 0.42% for Standard & Poor’s and 0.81% for the Nasdaq.
In Paris, the CAC 40, heavily weighted by banking stocks, gained 0.72% to 6,595.3 at 11:18 GMT. In Frankfurt, the Dax lost 0.45% and in London the FTSE lost 0.3%.
The pan-European FTSEurofirst 300 index lost 0.21%, the Eurozone EuroStoxx 50 was virtually unchanged and the Stoxx 600 fell 0.38%.
The general market context remains dominated by the same concerns as in recent weeks, from the war in Ukraine to the risk of an economic slowdown, including the tightening of monetary policy by major central banks and the health situation in China.
The European Central Bank (ECB) is meeting with its Governing Council on Thursday and should continue to pave the way for a hike in key interest rates; Faced with record inflation in the eurozone, money markets expect a total increase of 70 basis points by December.
Monthly consumer price data in the United States in March, expected Tuesday, is the other big event of the week for markets.
Investors are also preparing for the quarterly earnings of companies, most notably the sales of luxury giants LVMH and Hermès, as well as the accounts of major US banks, whose profits are expected to fall by about 35% year-on-year, according to Refinitiv. IBES.
SURVEY – The Fed will quickly tighten policy in the coming months
RATE
Expectations of a rapid normalization of monetary policy continue to support bond yields: 10-year Treasury yields are up four basis points to 2.7553% after a three-year record high at 2.7840%.
In Europe, the German 10-year yield rose by more than seven basis points to 0.792% after peaking at 0.798%, the highest level since February 2018. The French equivalent, at 1.309%, reached its highest level since July 2015 and then returned to 1.286%.
The yield spread between the 10-year French bond and the Bund of the same maturity narrowed to 50.1 basis points after the results of the first round of the presidential elections in France, which clearly had the incumbent party, Emmanuel Macron, in their sights. WALL STREET VALUES TO FOLLOW
Growth stocks such as Meta Platforms and Microsoft drop more than 1% into the foreground.
VALUES IN EUROPE
The European high-tech sector index (-1.3%) is also suffering from the rise in bond yields, unlike the banking sector, which rose by 1.11%.
In Paris, Crédit Agricole and BNP Paribas take up 2.18% and 3.35% respectively.
Societe Generale posted 6.79%, the largest increase in the Stoxx 600, after announcing its withdrawal from Russia with the sale of its stake in Rosbank and its insurance subsidiaries to Interros Capital.
On the other hand, tire maker Nokian Tires fell 12.36% after saying that new European Union sanctions against Russia will have a major impact on production.
CHANGES
After seven rising sessions, the “dollar index,” which measures the dollar’s variations against a basket of reference currencies, is stable.
The euro, at $1.0904, gained 0.26% as traders welcomed Emmanuel Macron’s advances in the first round of the French presidential election with relief.
The British pound, for its part, briefly lost ground against the dollar in response to the stronger-than-expected slowdown in UK economic growth in February, falling to 0.1% after 0.8% in January and from 0.3% expected.
OIL
After two consecutive weeks of declines, oil prices continue to fall as International Energy Agency countries draw on their strategic crude reserves and China’s sharp rise in COVID-19 cases.
The barrel of Brent fell 3.07% to $99.62 and that of US light crude (West Texas Intermediate, WTI) 3.55% to $94.77.
(Laetitia Volga, edited by Marc Angrand)
