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Market: Banks and commodities in support while waiting for the ECB


by Claude Chendjou

PARIS (Reuters) – Wall Street is expected to rise on Monday and European stock markets are moving in the green mid-session, driven by the banking, basic resources and luxury compartments in the wake of the good performance of Asian markets in the absence of major economic indicators, in a generally calm market due to Pentecost.

Futures on New York indices signal an opening on Wall Street up 0.81% for the Dow Jones, 0.94% for the Standard & Poor’s 500 and 1.28% for the Nasdaq.

In Paris, the CAC 40 took 1.08% to 6,555.28 around 11:50 GMT. In Frankfurt, the Dax gained 0.98%. In London, the FTSE advanced 1.16% after four days of closure linked to the celebrations of the Platinum Jubilee of Queen Elizabeth II. The resumption of the session in London is marked by the announcement of a motion of no confidence, scheduled for the evening, against British Prime Minister Boris Johnson, weakened by “Partygate”.

The pan-European FTSEurofirst 300 index advanced by 0.94%, the EuroStoxx 50 of the euro zone by 1.27% and the Stoxx 600 by 0.91%.

Equity markets, which suffered on Friday from inflation and interest rate fears after the release of the US jobs report dampened hopes that the Federal Reserve (Fed) pause in its monetary tightening, however, remain fragile.

Investors await Thursday the meeting of the Board of Governors of the European Central Bank (ECB) and Friday consumer price statistics in the United States. On Tuesday, the central bank of Australia holds its monthly meeting and a rise in the cost of credit of 25 basis points, to 0.60%, is expected by economists polled by Reuters.

In the United States, the markets anticipate rate hikes of half a point this month and in July and of nearly 200 points by the end of the year.

In the euro zone, the European Central Bank (ECB) has indicated that its deposit rate will return to positive territory by the end of September and the euro zone money markets are now expecting a 133 basis point increase in rates by the end of September. end of the year. Bank America analysts are predicting a 50 point rate hike in July and September.

No major indicator is on Monday’s agenda after the release in China of the Caixin services PMI, which shows an improvement from 36.2 in April to 41.4 in May, the 50 mark separating growth and contraction .

WALL STREET VALUES TO FOLLOW

Apple, which is holding its traditional annual developer conference on Monday, gained 1.6% ahead of the stock market.

VALUES IN EUROPE

In Europe, all the other major sectors on the rating are in the green, energy (+1.47%), new technologies (+1.46%), basic resources (+1.15%) and finance (+0.95%).

The positive trend in commodities and luxury is linked to new measures to ease health restrictions in Beijing and Shanghai, which could boost Chinese demand.

Kering, LVMH, Richemont advance from 0.80% to 1.30%, while TotalEnergies, Eni and BP take from 1.21% to 2.22%.

The prospect of a rate hike supports the banks whose index gains 1.52%. Societe Generale, BNP Paribas, Deutsche Bank and Unicredit win from 1.78% to 2.78%.

In other sectors, Just Eat Takeaway.com jumped 13.37% after information from the Times that Grubhub co-founder Matt Maloney is studying a takeover of the American subsidiary of the Dutch meal delivery specialist.

The British defense group BAE Systems, up 1.38%, is driven by a price target increase, while the investment company Melrose Industries gained 3.2% thanks to the announcement of the sale of its Ergotron division for $650 million.

RATE

The yield on ten-year US Treasuries, which hit a two-week high of 2.986% on Friday after the jobs report, is flat on Monday at 2.9534%. The two-year, the most sensitive to changes in rates, is displayed at 2.694%, the highest since May 18.

In Europe, the ten-year German Bund yield, which climbed Friday in session to 1.281%, the highest since 2014, is also virtually unchanged at 1.267%.

CHANGES

The prospect of an imminent ECB rate hike is supporting the euro which has stabilized above $1.07, well off its recent low at 1.0348. The single European currency gained 0.07% to 1.0727 dollars on Monday and hit a seven-year high against the yen at 140.35 after jumping 2.9% last week.

The dollar, also supported by expectations of rate hikes, fell 0.14% against a basket of benchmark currencies after rising 0.4% last week. The greenback, however, hit a one-month high against the yen at 130.99 and edged closer to its 20-year high hit at 131.34 last month.

OIL

Oil prices, which were moving up sharply at the start of the session, still on the back of supply fears, are now stable.

The barrel of Brent took 0.03% to 119.74 dollars and that of American light crude (West Texas Intermediate, WTI) 0.01% to 118.87 dollars.

NO MAJOR ECONOMIC INDICATOR ON THE JUNE 6 AGENDA

(Written by Claude Chendjou, edited by Kate Entringer)

Copyright © 2022 Thomson Reuters



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