by Laetitia Volga
PARIS (Reuters) – The main European stock markets are expected to rise slightly on Monday, although concerns about the war in Ukraine, the monetary policies of central banks and the health situation in China are expected to remain high.
Futures contracts indicate an increase of 0.27% for the Paris CAC 40, 0.25% for the Dax in Frankfurt, 0.15% for the FTSE in London and 0.24% for the EuroStoxx 50 .
Last week, the Stoxx 600 fell 0.23% and the CAC 40 lost 1% on lingering concerns about inflation and the economic impact of the war in Ukraine.
Volodimir Zelensky insisted on Sunday on the protection of the territorial integrity of Ukraine, after having hinted earlier that he was ready for a compromise, while peace talks between his country are due to open on Monday in Turkey. and Russia.
Moscow hinted on Friday that its goals were being revised to focus on controlling the Donbass region, where pro-Russian separatists have been fighting Ukrainian forces since 2014.
Investors are further questioning US monetary policy after the Chairman of the Federal Reserve (Fed) opened the door last week to a bigger rate hike to stem rising prices.
The week which opens will be animated by economic indicators with in particular the latest inflation figures in the euro zone, expected at a record 6.5% according to the Reuters consensus, the expenditure and income of American households and the monthly report on employment in the United States.
AT WALL STREET
With the exception of the Nasdaq, the New York Stock Exchange indices ended up slightly on Friday, driven largely by banking stocks thanks to a rise in the yield of the ten-year Treasury bill, to more than 2.5%. .
The Dow Jones gained 0.44% to 34,861.24 points and the S&P-500 gained 0.51% to 4,543.06 points. The session was marked, however, by a decline in values of the technology sector and the Nasdaq Composite fell 0.16% to 14,169.30 points.
Futures contracts currently point to a decline on Wall Street.
IN ASIA
After nine consecutive sessions of gains, the Nikkei index in Tokyo ended down 0.73%.
In China, the CSI300 index fell 1.11% and the Shanghai SSE index fell 0.35% on concerns over the country’s COVID-19 outbreak.
Since Monday, the city of Shanghai has been subject to a two-stage confinement in order to allow the screening of COVID-19 of its population. China’s financial capital recorded a record 3,450 cases of asymptomatic infection on Sunday.
RATE
After climbing 33 basis points last week, the yield on ten-year US Treasuries continues to rise and hit an intraday high since May 2019 at 2.557%, before returning to around 2.51%, investors expect accelerated monetary tightening from the Federal Reserve in the face of inflation.
Money markets are pricing in eight Fed rate hikes for the rest of the year, which would bring the fed funds rate range to between 2.50% and 2.75%.
The yield on five-year government bonds, at US5YT=RR;RT_YIELD_1%, exceeded that of 30-year Treasuries, at US30YT=RR;RT_YIELD_1%, marking an inversion of the yield curve.
In early trading, the ten-year German gained two basis points, to 0.579%, after crossing 0.6% for the first time in nearly four years.
In Japan, the yield on the ten-year government bond (JGB) reached its highest level in six years, at 0.250%, thus reaching the upper limit tolerated by the Bank of Japan despite an intervention of the central bank to try to curb the rise in sovereign bond yields.
The BoJ has announced its intention to buy an unlimited amount of ten-year government bonds at 0.25%.
CHANGES
The yen fell to its lowest level in more than six years against the dollar following the BoJ’s announcements.
“This widely anticipated move will help curb the rise in JGB yields,” said Masahiro Ichikawa, chief strategy officer at Sumitomo Mitsui DS Asset Management.
“This is a message from the BoJ that it will maintain an ultra-accommodative policy for the time being,” he added.
Against a basket of international currencies gained 0.3% and the euro fell to 1.0959 dollars.
In the cryptocurrency markets, bitcoin hit its highest level since early January at $47,765.94 in early trading.
OIL
In the oil market, prices are down as concerns about slowing demand in China grew after authorities in Shanghai announced a two-stage lockdown.
Brent lost 4.23% to 115.55 dollars and American light crude (West Texas Intermediate, WTI) dropped 4.68% to 108.57.
(Edited by Matthieu Protard)
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