by Laetitia Volga
PARIS (Reuters) – With the exception of the CAC 40 carried by the banks, European stock markets ended down on Monday in a market made nervous by the rise in yields on government bonds on fears of an acceleration by the big central banks to tighten their monetary policies.
After having taken up 1% in session, the CAC 40 in Paris ended with a gain of 0.12% to 6,555.81 points, resisting as best they could the downturn in world markets.
The British Footsie lost 0.67% and the German Dax lost 0.64%.
The EuroStoxx 50 index fell by 0.49%, the FTSEurofirst 300 by 0.73% and the Stoxx 600 by 0.59%.
In the United States, the three major Wall Street indices dropped from 0.6% to 1.7%.
Rising prices and central bank policies remain at the heart of investors’ concerns at the start of the week. The U.S. consumer price index due on Tuesday is expected to come in at 8.4% year on year in March, further increasing pressure on the Federal Reserve to try to control rising inflation .
Economists polled by Reuters believe the Fed is likely to announce two consecutive half-point rate hikes in May and then June, which could jeopardize growth in the world’s largest economy.
The European Central Bank (ECB) is meeting its Governing Council on Thursday and should continue to prepare the ground for an increase in key rates; Faced with record inflation in the euro zone, the money markets are expecting a rise of 70 basis points in total by December.
“With the ECB more concerned about the outlook for inflation than growth, we believe it will continue the process of policy normalization, relying on targeted fiscal policies to support private demand, unless the economic situation deteriorates markedly,” said Konstantin Veit, portfolio manager at PIMCO.
VALUES
The European high-tech sector index (-2.04%) suffered from the rise in bond yields, unlike the banking sector, up 0.58%, and insurance 0.86%.
In Paris, Crédit Agricole and BNP Paribas took 1.24% and 1.88% respectively.
Societe Generale climbed 4.96%, the biggest rise in the CAC 40, after announcing its withdrawal from Russia with the sale of its stake in Rosbank and its insurance subsidiaries to Interros Capital.
Down, LVMH (-1.87%) and Hermès (-3.21%) ended in the red as they approached the publication of their first quarter turnover scheduled for Tuesday and Thursday respectively.
RATE
With the prospect of an acceleration of monetary tightening in the United States, bond yields continue to rise. The ten-year American takes more than five basis points to 2.7724% after a high of more than three years at 2.7840%.
The ten-year German Bund yield reached its highest since September 2015 at 0.822% and its French equivalent a peak since July 2015 at 1.322%.
The gap between these two yields narrowed by five points to 49 basis points, after the results of the first round of the presidential election in France, which placed the incumbent, Emmanuel Macron, in the lead.
CHANGES
Supported by the rise in yields, the dollar gained 0.15% against a basket of international currencies.
The euro rose in session to 1.095 dollars before stabilizing around 1.0876, traders having welcomed the advance of Emmanuel Macron in the first round of the presidential election.
OIL
Oil prices are falling on the back of International Energy Agency countries drawing on their strategic crude reserves and a surge in COVID-19 cases in China.
The barrel of Brent fell by 3.85% to 98.82 dollars and that of American light crude (West Texas Intermediate, WTI) by 3.71% to 94.61 dollars.
TO BE CONTINUED :
(Laetitia Volga, edited by Jean-Michel Bélot)