by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to fall on Tuesday at the open and European stocks fell mid-session amid risk aversion linked to fears over interest rates, geopolitical tensions and results. companies deemed disappointing.
Futures on New York indices signal an opening on Wall Street down 0.89% for the Dow Jones, 0.74% for the Standard & Poor’s 500 and 0.96% for the Nasdaq.
In Paris, the CAC 40 fell by 0.27% to 7,315.53 around 12:35 GMT. In Frankfurt, the Dax yielded 0.36% and in London, the FTSE gave up 0.2%.
The pan-European FTSEurofirst 300 index fell by 0.09%, the euro zone’s EuroStoxx 50 by 0.47% and the Stoxx 600 by 0.06%.
Three days before the anniversary of the outbreak of war in Ukraine, Vladimir Putin on Tuesday accused NATO and the West of stoking the conflict in the mistaken belief that he could defeat Russia. Using a veiled nuclear threat, the head of the Kremlin announced that Moscow was suspending its participation in the New START treaty on strategic nuclear weapons, a decision regretted by NATO Secretary General Jens Stoltenberg.
On the macroeconomic level, the dynamism of services supported the growth of activity in the euro zone with a composite PMI index at 52.3 in February after 50.3 in January, show the preliminary results of the monthly survey by S&P Global with purchasing managers.
In the UK, private sector activity also posted a surprise rebound with a “flash” composite PMI at 53.0 in February from 48.5 in January.
In Germany, investor sentiment continued to improve in February, more strongly than expected, according to the survey by the ZEW economic research institute.
For analysts at Oddo BHF, these statistics, which reinforce the resistance of the European economy, at the same time fuel fears of prolonged monetary tightening.
Investors are also awaiting the “flash” PMI for manufacturing, services and composites in the United States on Tuesday as well as the publication on Wednesday of the minutes of the last monetary policy meeting of the American Federal Reserve (Fed), which should fuel debates on the future trajectory of rates.
WALL STREET VALUES TO FOLLOW
Walmart fell 3.5% ahead of the stock market as the retail giant said it expected full-year earnings below consensus due to the economic situation and pressure on its margins.
Home Depot fell 2.5% in market preview also in response to the publication of an annual profit forecast below Wall Street expectations.
VALUES IN EUROPE
On the pan-European Stoxx 600, the defensive compartment of utilities (+1.25%) is leading the increases and that of new technologies (-1.43%), sensitive to variations in interest rates, accuses the greater decline.
In Paris, Engie jumped 4.57%, the group’s results having soared in 2022 with the rise in gas prices. Capgemini lost 3.07%, the group anticipating weaker growth in its turnover this year.
In London, HSBC’s better-than-expected quarterly profit (+3.35%) was finally welcomed, but the title had fallen sharply at the start of trading due to the bank’s cautious forecasts.
RATE
Bond yields rise after the publication of the PMI indices which show an improvement in activity. The two-year German takes more than three basis points, to 2.92%, and the ten-year nearly four points, to 2.49%.
Britain’s two-year Gilt rate hit a high since October 17 at 3.9006% as investors price a 96% chance of a 25% Bank of England (BoE) rate hike additional basis points on March 23.
In the United States, the yields of two-year and ten-year Treasuries followed suit with an increase of approximately four points, to 4.66%, and nearly six points, to 3.88%, respectively.
CHANGES
On the foreign exchange market, the dollar gained 0.23% against a basket of benchmark currencies, heading for its best monthly performance since September 3.
The euro fell 0.26% to 1.0654 dollars due in particular to a stronger than expected contraction in activity in the manufacturing sector in the euro zone, the PMI index having come out at 48.5 against 48, 8 the previous month and a forecast of 49.3.
OIL
Oil prices, which erased some of their initial losses after the release of PMI data, are mixed: Brent fell 0.23% to $83.88 a barrel and US light crude (West Texas Intermediate, WTI) takes 0.94% to 77.06 dollars.
(Written by Claude Chendjou, edited by Bertrand Boucey and Matthieu Protard)
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