by CORENTIN CHAPRON
PARIS (Reuters) – European stock markets are expected to rise slightly at the opening on Monday, while tensions in the Middle East remain high and American inflation could be more persistent than expected.
According to the first available indications, the Parisian CAC 40 is up 0.32% at the opening. Futures contracts on the FTSE in London suggest a decline at the opening of 0.44%, against an increase of 0.28% for the Dax in Frankfurt and 0.41% for the EuroStoxx 50.
The markets are worried about a possible response from Israel after the large-scale attack carried out by Iran on Saturday, while the security situation in the Middle East continues to deteriorate.
The risk of an escalation is fueling risk aversion, with gold hitting a record Friday despite high rates, while risky assets declined.
“Israel could accept a ‘de-escalation solution’, such as sanctions against Iranian energy and missile production. (…) With or without sanctions against Iran, the geopolitical risks tend, in the long term, towards a further rise in energy prices,” warn Rabobank strategists.
Beyond the risks of conflict, investors are worried about a rebound in energy prices, to their highest in six months, and its impact on inflation.
The latest figures published in the United States suggest that inflation is more resilient than expected, which is postponing rate cuts from the Federal Reserve and putting pressure on stocks and sovereign securities.
Few indicators are expected this week in the United States, and investors will be attentive to central bankers’ statements to refine their economic outlook.
VALUES TO FOLLOW:
A WALL STREET
The New York Stock Exchange ended lower on Friday after major US banks published mixed results at the end of a week marked by inflation data, evolving expectations of Fed policy and geopolitical tensions.
The Dow Jones index fell 1.24%, or 475.84 points, to 37,983.24 points. The broader Standard & Poor’s 500 lost 75.65 points, or 1.46% to 5,123.41 points. The Nasdaq Composite fell 267.10 points (1.62%) to 16,175.094.
JPMorgan Chase and Wells Fargo reported losses on Friday, after posting quarterly results that fell short of expectations.
IN ASIA
The Tokyo Stock Exchange is falling, in the wake of Wall Street’s sharp decline on Friday and while tensions in the Middle East are fueling risk aversion. The Nikkei lost 325.18 points, or 0.8% to 39,198.78 points while the broader Topix lost 40 points, or 0.4% to 8,922.00 points.
Tokyo Electron lost 0.89%, while Advantest lost 1.78%. The banking sector fell by 0.34%, after the disappointing results of American banks on Friday.
Chinese markets are rising after new stock market rules were proposed on Friday, aimed at supporting stock markets and investors. The Shanghai SSE Composite takes 1.28%, the CSI 300 2.03%.
RATE
US yields are rising, with markets repositioning themselves after the latest data published in the United States.
The ten-year Treasury yield rose 5.9 bps to 4.5584%, while the two-year rate rose 4.1 bps to 4.9226%.
CHANGES
Markets are hesitant after a burst of data raising fears of persistent inflation in the United States last week.
The dollar declined by 0.06% against a basket of reference currencies, while the euro gained 0.08% to 1.065 dollars, and the pound sterling 0.08% to 1.246 dollars.
In Asia, the yen fell 0.35% to 153.82 yen per dollar, while the Australian dollar gained 0.34% to 0.6485 dollars.
OIL
Crude prices are eroding, the markets having already fully integrated the risks of an escalation in the Middle East.
Brent fell 0.39% to $90.1 per barrel and American light crude (West Texas Intermediate, WTI) lost 0.5% to $85.23.
MAIN ECONOMIC INDICATORS ON THE AGENDA OF APRIL 15:
COUNTRY GMT INDICATOR PERIOD PREVIOUS CONSENSUS
ZE 09:00 Industrial production Feb. 0.8% -3.2%
-over one year -5.7% -6.7%
US 12:30 Retail sales March 0.3% 0.6%
-over one year nd 1.5%
(Written by Corentin Chappron, edited by Blandine Hénault)
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