by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to fall slightly and European stock markets are moving in disorder mid-session on Monday, in a context of caution still linked to inflation, the rapid rise in interest rates and fears of a recession, economic factors to which are added new geopolitical tensions due to the latest developments in the conflict in Ukraine. Futures on New York indices signal an opening on Wall Street down 0.07% for the Dow Jones, 0.22% for the Standard & Poor’s 500 and 0.31% for the Nasdaq. In Paris, the CAC 40 fell 0.17% to 5,857.21 around 11:45 GMT. In London, the FTSE lost 0.19%. In Frankfurt, the Dax, on the other hand, advances by 0.64%.
The pan-European FTSEurofirst 300 index takes 0.05% and the Stoxx 600 nibbles 0.01%. The euro zone’s EuroStoxx 50 lost 0.06%.
Russia on Monday morning bombed several cities in Ukraine, including the capital Kyiv, killing several people in what appears to be retaliation for the attack on the Crimean bridge that President Vladimir Putin described as terrorist.
Ukrainian President Volodimir Zelensky and his French counterpart Emmanuel Macron held talks on Monday morning after the Russian bombings, while the G7 will hold an emergency meeting on Ukraine on Tuesday.
“We have geopolitical tensions and we are moving towards further monetary tightening in the United States,” said Kit Juckes of Societe Generale, adding that the market is wondering if this tightening will not be too important to the point of greatly weakening the economy.
Money markets are banking with an 80% chance of a three-quarter point hike in US Federal Reserve (Fed) rates on November 2.
Investors also await this week the new economic forecasts from the International Monetary Fund (IMF), the figures for producer and consumer prices in the United States and the first results of American companies for the third quarter.
Ahead of the results in Europe, wage increases are worrying some investors, who fear a deterioration in corporate profits.
Turning to inflation, Klaas Knot, a member of the Governing Council of the European Central Bank (ECB), said on Monday that there was a good chance that the rise in prices in 2024 would exceed the 2.3% forecast by the Frankfurt institution and that the markets seemed not to have yet integrated this scenario.
In the economic indicators of the day, the sentiment of investors in the euro zone fell in October, to -38.3, its lowest level since May 2020, according to the monthly survey by the Sentix institute.
VALUES IN EUROPE
On the pan-European Stoxx 600, the largest declines were in the food and beverage (-0.81%) and utilities (-0.95%) compartment, while on the other side of the spectrum, distribution (+2.04%) recorded the best performance.
In individual values, Renault gained 3.39% and hit its highest level since February after the confirmation of discussions with its Japanese ally Nissan on a possible evolution of their alliance.
The semiconductor groups Infineon, BE Semiconductor and ASML fell by 0.39%, 0.84% and 0.79% respectively after the decision of the United States on Friday to impose new export control measures to China, particularly in computer components.
RATE
Bond markets are closed in the United States due to Columbus Day.
In Europe, the ten-year German Bund yield was stable at 2.198%, while the two-year yield fell nearly seven points to 1.80% after Friday’s sharp rise linked to the publication of the monthly report on the employment in the United States, which dampened hopes of a lull in the rise in Fed rates.
CHANGES
The dollar is rising again (+0.25%) against other major currencies pending the publication this week of new inflation data which should confirm that the pressure on prices remains strong.
The euro, down 0.52%, is trading at 0.969 dollars.
The pound sterling contracted by 0.38% to 1.105 dollars despite the announcement by the Bank of England of the raising of the ceiling for its purchases of securities.
OIL
Oil prices retreat after five consecutive sessions of increases, investors are also worried about the slowdown in economic activity in China, the PMI Caixin-S&P Global services in the country showed a contraction in the sector for the first time. since May.
Brent fell 0.89% to 97.05 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.92% to 91.79 dollars.
(Written by Claude Chendjou, edited by Kate Entringer)
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