by Diana Mandia
(Reuters) – The main European stock markets are expected to rise at the opening on Monday, after last week’s sharp decline due to financial turmoil linked to the upcoming legislative elections in France.
According to the first available indications, the Parisian CAC 40, which lost 2.66% on Friday, could gain 0.41% at the opening.
Futures contracts signal an increase of 0.31% for the Dax in Frankfurt, 0.44% for the FTSE in London and 0.22% for the Stoxx 600.
Risk appetite should resume on Monday after a difficult week for the stock markets, particularly in France, where the prospect of a victory for far-right or left parties following the legislative elections of June 30 and 7 July brought strong tensions. The yield gap between French and German ten-year bonds DE10FR10=RR notably rose on Friday to a seven-year high, to more than 82 basis points.
French banks have been particularly hard hit, with BNP Paribas, Société Générale and Crédit Agricole losing between 12% and 16% last week, the largest decline since the March 2023 banking crisis.
In this context of uncertainties, and while the electoral campaign begins this Monday, officials of the European Central Bank (ECB) do not intend to discuss recourse to its bond purchase program. urgency to come to the aid of France and believe that it is up to French politicians to reassure investors, five sources told Reuters.
Citi further lowered its recommendation on European stocks from “overweight” to “neutral” on Monday, citing heightened political risks in France.
On the macroeconomic front, markets will see final data on consumer prices in the eurozone on Tuesday, as well as US retail sales figures and interest rate decisions from several central banks.
VALUES TO FOLLOW:
A WALL STREET
The New York Stock Exchange ended in disarray on Friday, with investors catching their breath after several consecutive sessions of increases.
The Dow Jones index .DJI lost 0.1%, the broader Standard & Poor’s 500 .SPX finished stable 0% and the Nasdaq Composite .IXIC advanced 0.1%.
IN ASIA
Asian stock markets fell on Monday after two mixed Chinese economic indicators pointed to an up-and-down recovery in the world’s second-largest economy.
China’s industrial production increased 5.6% in May year-on-year, a slowdown from +6.7% recorded in April, while house prices fell at the fastest pace in more than 9 years and half, despite the government’s efforts to support real estate developers.
On a more positive note, retail sales in China beat forecasts, increasing 3.7% in May.
In China, the composite index of the Shanghai Stock Exchange fell by 0.61% and the CSI 300 of large capitalizations lost 0.20%.
The Hong Kong Stock Exchange fell 0.03%.
The Tokyo Stock Exchange fell by 1.83, in a context of risk aversion against a backdrop of questions about the economic growth of the United States and that of Japan.
Investors are awaiting details of the next measures from the Bank of Japan, which announced on Friday that it would begin to reduce its bond purchases and that it would announce in July a detailed plan to reduce its balance sheet.
RATES/EXCHANGES
The yield on ten-year Treasuries increased by 2.5 basis points to 4.2402%.
In the euro zone, the ten-year German Bund yield rose 1.6 basis points to 2.3720%, while that of the ten-year OAT fell 1.6 basis points to 3.1584. %.
The yield gap between French and German ten-year bonds DE10FR10=RR, under pressure due to the political situation in France, stands at 77 basis points after reaching a seven-year high on Friday, at more than 82 points .
On the foreign exchange markets, the dollar is stable against a basket of reference currencies, just like the euro, battered last week by political turbulence in France, which is trading at 1.0693 dollars.
OIL
Oil prices are falling after data released Friday showing declining U.S. consumer sentiment and as crude production rose in May in China, the world’s largest crude importer.
Brent declined 0.5% to $82.21 per barrel, while American light crude (West Texas Intermediate, WTI) lost 0.48% to $78.07.
MAIN ECONOMIC INDICATORS ON THE AGENDA FOR MONDAY, JUNE 17:
COUNTRY GMT INDICATOR PERIOD CONSENS PREVIOUS
US ENT
EZ 09h Growth of T1 nd +3.1%
00 salaries
Hand costs T1 nd +3.4%
of work
USA 12h “Empire state” index June -9.25 -15.60
30
(Written by Diana Mandiá, edited by Blandine Hénault)
Copyright © 2024 Thomson Reuters