(Updated with futures, Tokyo close, European bond market open, bitcoin, UK April GDP, metals)
* The main European indices expected in the red
* Wall Street and Tokyo ended lower after US inflation
* US bond yields and the “dollar index” are rising
* The Fed and BoE meeting on the agenda for the week
* China’s stock markets fall amid COVID-19 outbreak
by Laetitia Volga
PARIS, June 13 (Reuters) – Major European stock markets are expected to fall on Monday as the latest U.S. inflation data reignited fears of aggressive monetary tightening by the Federal Reserve as the situation health in Beijing increases uncertainties for global growth.
Futures contracts show a decline of 2.09% for the Parisian CAC 40
.FCHI , 1.72% for the Dax in Frankfurt .GDAXI , 1.05% for the FTSE in London .FTSE and 1.86% for the EuroStoxx 50.
The trend should therefore be negative again in Europe, still affected by the higher than expected rise in consumer price figures in the United States as monetary policy announcements from the Federal Reserve (Fed) loom on Wednesday. nL8N2XX3B2
Investors fear that the acceleration of inflation to 8.6% over one year in the United States, its highest level since December 1981, will force the American central bank to tighten its monetary policy, with the risk of a blow shutdown for the economy.
Markets are pricing the odds of a half-point Fed rate hike on Wednesday at 80% and a 75 basis point hike at 20%.
The Bank of England (BoE), which meets its committee Thursday, should also raise its main rate, for the fifth time since December.
Fears for the global economy are further fueled by the COVID-19 crisis in China. Beijing’s most populous district of Chaoyang announced several large-scale testing campaigns on Sunday to stem the spread of the coronavirus.
THE VALUES TO FOLLOW: nL8N2XX4AY
AT WALL STREET
The New York Stock Exchange ended lower on Friday following the publication of statistics attesting to the strength of inflation in the United States.
The Dow Jones Index .DJI fell 2.73% to 31,392.79 points, the S&P-500 .SPX lost 2.91% to 3,900.73 points and the Nasdaq Composite .IXIC fell 3.52% to 11,340.02 points.
Over the week, the S&P lost 5.06%, the Dow 4.58% and the Nasdaq 5.60%, thus signing their worst week since the one that ended on January 21.
Futures contracts currently indicate a decline of between 1.46% and 2.32% at the opening.
IN ASIA
Wall Street’s decline on Friday weighed on the trend in Asia where the Nikkei on the Japanese Stock Exchange .N225 lost 3.01%, falling below 27,000 points for the first time in two weeks.
In China, the Shanghai SSE Composite .SSEC lost 1.52% and the CSI 300
.CSI300 1.8%.
RATE
Selling in the US bond market continues for the fourth straight session after inflation picked up, pushing yields higher.
That of ten-year Treasuries US10YT=RR gained more than one basis point to 3.1687% after a five-week peak at 3.202%. The two-year US2YT=RR climbed ten basis points to 3.1409%, trading at its highest level since December 2007.
In Europe, the German Bund’s yield DE10YT=RR fell slightly in early trading, to 1.489%.
CHANGES
The dollar gained 0.34% against a basket of reference currencies .DXY and it reached a peak against the yen since 1998 at 135.17 JPY= .
“Rising overseas yields and energy prices, coupled with continued dovish messaging from the Bank of Japan, pushed the dollar/yen to a more than 20-year high,” analysts said. from Barclays.
At the same time, the euro lost 0.3% around 1.048 dollars EUR= .
The British pound is down against the greenback and the euro after the British economy unexpectedly contracted 0.3% in April, while the Reuters consensus had forecast an expansion of 0.1%. nL6N2Y0052
GBP= GBPEUR=
On the crypto side, bitcoin BTC=BTSP fell to its lowest since December 2020, at $24,888.88, as platform Celsius Network announced it would halt withdrawals and transfers between accounts due to “terms extremes of the market”.
OIL
The oil market is trading in the red as a surge in COVID-19 cases in Beijing dampened hopes of a quick recovery in crude demand in China amid concerns over the global economic outlook with rising of US inflation.
Brent LCOc1 fell 1.72% to $119.91 a barrel and US light crude (West Texas Intermediate, WTI) CLc1 fell 1.79% to $118.51.
METALS
General risk aversion and concerns about the health crisis in China penalize base metal prices: that of aluminum CMAL3 reached a six-month low at 2,643.50 dollars per ton and that of copper
CMCU3 a two-week low.
Iron ore futures prices on the Dalian market in China are also falling. The September contract hit a near two-week low of 891 yuan.
NO MAJOR ECONOMIC INDICATORS ON THE DAY’S AGENDA
(Written by Laetitia Volga, edited by Bertrand Boucey and Kate Entringer)