by Claude Chendjou
PARIS (Reuters) – European stock markets show slight variations mid-term on Monday in a relatively calm session in the absence of Wall Street and pending the publication this week of the minutes of the last meeting of the Federal Reserve. (Fed) and a key inflation indicator in the United States.
The Parisian CAC 40 is stable (-0.06%) at 7,343.64 points around 11:40 GMT. In Frankfurt, the Dax nibbles 0.1% and in London, the FTSE is practically unchanged (+0.01%).
The pan-European FTSEurofirst 300 index advanced 0.14%, the EuroStoxx 50 in the euro zone gleaned 0.08% and the Stoxx 600 0.18%.
Stock and bond markets are closed Monday on Wall Street due to “Presidents’ Day” and will open Tuesday with investors’ eyes likely on the Fed’s “minutes”, expected on Wednesday, while concerns about a prolonged rise in rates weighed on the stock markets last week.
The Fed’s preferred measure of inflation, the core PCE index, will also be released on Friday. The Reuters consensus forecasts an acceleration to 0.4% in January over one month, the highest level in five months, which does not argue for a lull in the cost of credit.
Markets are now pricing the peak in fed funds rates at around 5.3% by July, down from a forecast of below 5% at the start of February.
“It may be premature to believe that a recession is now out of the question when the Fed will have tightened more than 500 basis points in a year, and the impact of monetary policy has tended in the past to be felt with a lag on the real economy, which can range from one to two years”, explains Mislav Matejka, strategist at JPMorgan.
Geopolitical tensions, linked to the firing of ballistic missiles by North Korea and warnings from Washington about military support from China to Russia, do not favor risk-taking either. US President Joe Biden also made a surprise visit to Kyiv on Monday, on the eve of an important speech by Russian President Vladimir Putin and four days before the first anniversary of the invasion of Ukraine.
VALUES IN EUROPE
The basic resources compartment, driven by the prospect of a recovery in demand in China, led the Stoxx 600 with a gain of 0.97%. On the other hand, the new technologies index shows the strongest sectoral decline with a decline of 0.38%.
In business news, Faurecia takes 1.95% and Hella 0.1%, the automotive supplier Forvia, born from the takeover by the French group of its German competitor, which announced on Monday that it expected an improvement in its results this year. The European automobile index rose by 0.75%.
Valneva advances 2.11% on the announcement of a priority review in the United States of its vaccine candidate against chikungunya.
On the downside, the Austrian bank Raiffeisen plunged 6.75%, the American authorities having requested information on its activities in Russia.
Telecom Italia is selling 2.81%, as the Italian public bank CDP and the Australian fund Macquarie have still not submitted an offer to compete with KKR’s proposal for the fixed network of the Italian telecom operator.
RATE
The ten-year German Bund yield was roughly flat on Monday at 2.43%, and not far from the high since August 2011, hitting in early January at 2.569%.
The two-year one is showing at 2.87% after hitting a 14-year high of 2.94% on Friday, as Isabel Schnabel, a member of the European Central Bank (ECB), said that the markets were perhaps underestimating be the persistence of inflation.
CHANGES
The dollar is stable (-0.01%) against a basket of benchmark currencies after hitting a six-week high last week.
The Japanese currency is trading at 134.03 yen to the dollar, a two-month low, pending Friday’s hearing before Japan’s parliament of Kazuo Ueda, a candidate for the post of governor of the Bank of Japan ( BoJ).
The euro, down 0.08%, is trading at $1.0685.
OIL
The oil market is supported by analyst estimates that China is expected to import a record amount of crude this year, at 11.8 million barrels per day (bpd), amid rising demand following the reopening of the country.
The two oil benchmarks, which had lost around 4% last week, advanced 0.66% to $83.55 a barrel on Monday for Brent and 0.72% to $76.89 for US light crude. (West Texas Intermediate, WTI).
(Written by Claude Chendjou, edited by Kate Entringer)
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