The Euronext stock exchange in Paris
by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to remain unchanged on Monday and the European stock markets are on a downward trend at mid-session, the euphoria of last week fading at the start of a week full of meetings of major central banks , including that of the American Federal Reserve and the Bank of England.
New York index futures signal Wall Street opening up around 0.10% for the Dow Jones, the Standard & Poor’s 500 and the Nasdaq after a session in the red on Friday.
In Europe, where the stock markets closed on Friday with their best weekly performance in two months, the Parisian CAC 40 fell by 1.07% to 7,299.67 points around 10:45 GMT. In Frankfurt, the Dax lost 0.6% and in London, the FTSE lost 0.33%.
The pan-European FTSEurofirst 300 index fell by 0.62%, the Eurozone EuroStoxx 50 by 0.85% and the Stoxx 600 by 0.70%.
After the prospect of an imminent end to rate hikes was seen in Thursday’s monetary policy statement from the European Central Bank (ECB), which appeared to raise rates for the last time by 25 basis points, investors are waiting cautiously this week the decisions of the central banks of Switzerland (Thursday), Norway (Thursday), the United Kingdom (Thursday), Japan (Friday) and especially the United States (Wednesday).
While a break is expected on Wednesday on the rates of the American Federal Reserve (Fed), the Bank of England (BoE) should opt, on Thursday, for a fifteenth increase in the cost of credit, but the market anticipates that this -this will be the last of the tightening cycle that began in December 2021.
“If the BoE does indeed hike, we expect it to be similar to that of the ECB, with subsequent comments indicating that it is likely done with hikes,” Mohit Kumar, chief executive officer, wrote in a note. economist for Europe at Jefferies.
Goldman Sachs, for its part, lowered its forecast for the BoE terminal rate to 5.5%, which implies a final increase of 25 basis points.
Data on inflation in the United Kingdom, expected on Wednesday, and those on the euro zone, expected on Tuesday, also encourage the market to be cautious, a prudence which can be seen in bond yields in Europe, which have started to rise again.
VALUES IN EUROPE
Among the major sectoral indices on the European stock market, health (-1.1%) and new technologies (-1.33%) showed one of the biggest declines.
In Paris Société Générale lost 9.31%, the market not being convinced by the strategy revealed by the new general director of the bank, while Unibail-Rodamco (+1.29%) benefited from an increase in recommendation from Barclays.
In “tech”, Nordic Semiconductor plunged 11.74%, at the bottom of the Stoxx 600, the group having lowered its revenue forecasts for the third quarter.
The pharmaceutical laboratory Lonza fell 8.99% with the announcement of the departure of its general director, Pierre-Alain Ruffieux.
Martin Sorrell’s S4 Capital advertising group tumbles 25.02% after lowering its annual forecast for the second time in as many months, saying recession fears are making clients cautious.
RATE
Eurozone bond yields rise after comments deemed restrictive by ECB officials, including Bostjan Vasle and Robert Holzmann who said a further rate hike could not be ruled out, while Peter Kazimir said that We had to wait until spring to conclude that the peak in rates had been reached.
The ten-year German Bund yield rises almost three basis points to 2.694%
In the United States, the yield on Treasuries of the same maturity increased by 2.5 basis points, to 4.3425%
CHANGES
The dollar index, measuring the fluctuations of the greenback against a basket of international currencies, approached its highest level in six months on Monday, at 105.32 points, before the decisions of several central banks.
“Overall, we are quite positive on the dollar,” said Alvin Tan, foreign exchange strategist at RBC Capital Markets. “The U.S. economy is outperforming Europe and Asia, especially China,” he added.
The euro is trading at $1.0669 (+0.13%) and the pound sterling at $1.2402 (+0.1%).
OIL
The oil market rises for the third session in a row, driven by forecasts of a reduction in supply in the fourth quarter and an increase in demand in China.
Brent rose 0.51% to $94.41 per barrel, American light crude (West Texas Intermediate, WTI) rose 0.67% to $91.38.
(Written by Claude Chendjou, edited by Blandine Hénault)