by Laetitia Volga
PARIS (Reuters) – The main European stock markets are expected to rise on Monday at the opening after Wall Street’s sharp rebound during the previous session as investors seem less worried about the pace of monetary tightening in the United States.
The first indications available indicate an increase of 0.46% for the Parisian CAC 40, 0.66% for the Dax in Frankfurt, 0.45% for the FTSE in London and 0.43% for the EuroStoxx 50 .
The S&P-500 posted its largest one-session percentage gain since May 2020 on Friday as signs of slowing economic growth and the recent decline in commodity prices, including oil, eased fears that the Federal Reserve raise interest rates quickly.
“Thursday’s publication of US PMI indices below expectations (…) could suggest that the Fed will adopt a less aggressive monetary policy than previously estimated. Investors now expect a rate hike of 50 points basis in July instead of the 75 points expected until last Thursday,” said John Plassard at Mirabaud.
In the news of the central banks, the markets will be attentive this week to the declarations coming from Sintra, in Portugal, where the European Central Bank (ECB) must open at the end of the day its annual forum of three days.
The president of the institution will give her welcome speech at 5:30 p.m. GMT and speak again on Tuesday morning, while her Fed counterpart, Jerome Powell, will speak on Wednesday from 1:00 p.m. GMT.
China’s progress in controlling the COVID-19 outbreak should be another supportive factor for equity markets.
AT WALL STREET
The New York Stock Exchange closed sharply higher on Friday, driven by the downward revision of investor expectations for US rates in the face of increasingly clear signs of economic deterioration.
The Dow Jones index gained 2.68% to 31,500.68 points, the S&P-500 gained 3.06% to 3,912.03 points and the Nasdaq Composite rose 3.34% to 11,607.62 points.
The eleven sector indices of the S&P finished in the green.
This development enabled Wall Street to record a positive performance over the week for the first time in a month, since the S&P-500 posted a rebound of 6.46%. The Dow Jones gained for its part, still over the week, 5.4% and the Nasdaq 7.49%.
The final results of the University of Michigan’s survey of consumer sentiment confirmed that this barometer fell to an all-time low in June even though inflation fears have eased somewhat.
Futures contracts give an opening without much change.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei rose 1.66%, carried by the heavyweights of the semiconductor sector in the wake of Wall Street.
In China, the Shanghai SSE Composite rose 0.76% and the CSI 300 1.07% thanks to positive news on the health front.
Shanghai authorities announced on Sunday that dining halls in some neighborhoods would reopen on Wednesday after no new locally transmitted COVID-19 cases were reported for the first time in two months.
Beijing had announced the day before the resumption of face-to-face classes in primary and secondary schools in the capital.
Markets are also benefiting from the largest injection of liquidity into the banking system by the People’s Bank of China in nearly three months.
EXCHANGES/RATES
On the currency market, the dollar lost 0.2% against a basket of benchmark currencies and the euro was almost unchanged at 1.0566 dollars.
US government bond yields are up nearly four basis points for the 10-year to 3.164% which hit a two-week low of 3.005% last Thursday.
OIL
The oil market is moving slightly lower with doubts about economic growth and demand for crude.
Brent fell 0.2% to 112.89 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.29% to 107.31 dollars.
(Written by Laetitia Volga, edited by Tangi Salaün)
Copyright © 2022 Thomson Reuters