Europe is green and expected to rebound on Wall Street-May 23, 2022 14:00

Mid-term European Market Progress Session

Mid-term European Market Progress Session

By Laetitia Volga

Paris (Reuters)-Wall Street is expected to rise in the middle of Monday’s session and European equities are expected to rise, despite concerns about central bank rate hikes and global growth.

Futures contracts are up 0.98% for the Dow Jones, 0.85% for the Standard & Poor’s-500 and 0.6% for the NASDAQ.

These last two stock market indices closed in the red on Friday for the seventh straight week. This is the longest series of declines since the end of the dot-com bubble in 2001. The Dow has fallen for eight consecutive weeks, the worst since 1932.

Comments from US President Joe Biden, who is open to lowering tariffs on Chinese imports to combat inflation, should help improve US market sentiment.

“Investors see this as a potential escalation of the trade war between the two economies, which has revived traders’ optimism about higher-risk assets,” said Pierre Veyret of Activ Trades. “.

In Europe, the stock market is in the positive direction of US futures, especially as Germany’s business environment, which is the only key indicator of the day, has benefited from an unexpected upturn in May thanks to the recovery of service activity. I’m following.

In Paris, CAC 40 increased 0.13% to 6,293.57 around 11:40 GMT, suppressed by Vinci. In Frankfurt, Dax takes 0.66% and in London, FTSE gets 0.96%.

The Pan-Europe FTS Eurofirst 300 index rose 0.53%, with EuroStoxx 50 0.38% and Stoxx 600 0.56%.

However, there are still concerns about the impact of inflation on businesses and the impact of excessive fiscal tightening on economic growth, not to mention the outbreak of COVID-19 in China.

European investors are paying particular attention to the statement by European Central Bank President Christine Lagarde that deposit rates are likely to exceed zero by the end of September.

“The ECB seems to have finally joined the party. Inflation may be a difficult task, but it seems to have promised to bring interest rates to zero. (…) Tilt the eurozone in a raging war in Ukraine. It may be too big a challenge for Christine Lagarde to fall into a recession that tightens monetary policy without it, “said IG Group analyst Chris Beauchamps.

European value

Rising oil and metal prices logically bring about the stock market sector associated with them. The Stoxx energy index rises 1.61% and that of basic resources rises 2.09%.

ArcelorMittal leads CAC 40 with a gain of 3.41% and TotalEnergies is not far behind at 2.20%.

Vinci lost 3.31% after the group’s subsidiary was reportedly charged with “private corruption.”

Publicis fell by 2% and was punished for downgrading Morgan Stanley to “underweight.”

Elsewhere in Europe, kingfishers increased 2.76% after posting quarterly revenues significantly higher than pre-pandemic results.

In Madrid, Siemens GAMESA rose 6.27% and Siemens Energy (-2.57) offered to buy back a minority stake in its wind subsidiary for € 4.05 billion.

change point

After Christine Lagarde’s restrictive statement on ECB interest rates, the euro amplified its progress. When trading below 1.06 before the intervention, it rose 0.98% to $ 1.0663, the highest in a month.

The dollar (-0.97%) has fallen again against the basket of international currencies.

rate

Eurozone bond yields are on the rise due to a slight increase in risk appetite that negatively impacts government bonds, an unexpected improvement in Germany’s Ifo Business Environment Index, and the announcement of Christine Lagarde.

Germany’s yield for 10 years rose 4 basis points to 0.98%.

Money markets still expect the ECB to rise by about 105 basis points by the end of the year, and estimate that it is 100% likely to rise by 25 basis points in July.

“The ECB Governor’s remarks did not have much impact on the market due to broad consensus on interest rates in the zero or slightly positive territory by the end of the year,” Massimiliano Maxia told Allianz. “Investors are more focused on economic growth because they have already priced future ECB decisions,” he added.

In the United States, yields on 10-year government bonds rose 4.3 points to about 2.823%.

oil

The oil market has benefited from the depreciation of the dollar, and after Memorial Day next weekend, fuel demand is expected to increase not only in China but also in the United States, and the summer major travel season begins. Country.

Brent was up 0.96% to $ 113.63 and US light crude oil (West Texas Intermediate, WTI) was up 0.83% to $ 111.19.

(Written by Laetitia Volga, edited by Kate Entringer)

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