EUROPEAN SCHOLARSHIPS DROP MID SESSION
by Marc Angran
PARIS (Reuters) – Wall Street expected to fall and European stock markets fell mid-session on Wednesday, the prospect of an accelerated rise in US interest rates remains the main concern in markets, while that of new sanctions against Russia bolsters the oil market .
Futures contracts on New York’s major indices point to a 0.55% open for the Dow Jones, 0.71% for the Standard & Poor’s 500 and 1.12% for the Nasdaq.
The latter already lost 2.35% on Tuesday and the S&P 500 1.26% after statements by Fed governor Lael Brainard about returning to a “more neutral” monetary policy by the end of the year through rate hikes and the reduction. of the central bank’s balance sheet.
These comments have impacted the stock market trend all the more as they come from an official considered a “dove” and they remain nervous ahead of the report from the Fed’s March 18 meeting: 00 hours GMT.
In Europe, investors also fear that the next wave of economic sanctions against Moscow will encourage another price hike.
In Paris, the CAC 40 lost 1.54% to 6,543.47 points at 11:00 GMT, the lowest level since March 25. In London, the FTSE 100 lost 0.25% and in Frankfurt the Dax lost 1.5%.
The EuroStoxx 50 index is down 1.78%, the FTSEurofirst 300 1.03% and the Stoxx 600 1.16%.
The latter, which had just completed three consecutive increases, is also suffering from the announcement of a contraction in service activity in China, the stronger than expected decline in industrial orders in Germany and confirmation of the strong increase in producer prices. in the eurozone (+31.4% yoy in February).
OIL
Undecided at the start of the day, the oil market is now firmly on the rise, with the prospect of further sanctions against Russia outweighing demand concerns.
Brent gained 1.06% to $107.77 a barrel and US light crude (West Texas Intermediate, WTI) rose 1.37% to $103.36.
They were hesitant at the start of the session, market sources explained after last week’s announcement by the American Petroleum Institute (API) of an increase in crude inventories in the United States.
RATE
Lael Brainard’s statements are fueling the rise in bond yields on both sides of the Atlantic: that of 10-year US Treasuries rises an additional more than eight basis points to 2.6426%, the highest level since February 2019, and the German equivalent of nearly five points to 0.666%, the highest level since March 2018.
The ten-year French bond has now reached its highest level since 2015, at 1.223%, with jitters at the approach of the presidential election adding to the overall context, even as some investors put the issue of the vote into perspective.
“The risk premiums on French assets should remain lower than in 2017 and already seem sufficient in our view,” explains Xavier Chapard of LBPAM. “Firstly, the most likely scenario remains by far that of the re-election of Emmanuel Macron, in which case the risk premiums would disappear immediately after the second round. Above all, the risk of the election of Marine Le Pen to markets is much lower than in 2017.”
VALUES IN EUROPE
Almost all major sectors of the European rating are moving in the red, with telecommunications, defensives and energy being the only ones to maintain a balance.
By contrast, the high-tech sub-fund, still sensitive to the prospect of higher interest rates, fell by 2.85%, and the auto fund, one of the most cyclical, lost 2.79%.
Among the largest declines in the CAC 40 are Stellantis (-4.62%), STMicroelectronics (-3.32%) and Worldline (-3.07%).
EXCHANGE The dollar continues to appreciate against the other major currencies and the index, which measures its movements against a reference basket, reached a new all-time high of almost two years (+0.06%).
For its part, the euro is suffering both from the prospect of faster monetary tightening in the United States and from fears related to the impact of the sanctions against Moscow: it fell to its lowest level since March 8 at $1.0875 before he returned to equilibrium.
(Report Marc Angrand, edited by Jean-Michel Bélot)
