MARKET POINT-Europe expected to rise after the strong rebound on Wall Street (updated) – 06/27/2022 at 08:38


(Updated with futures, Tokyo close, European bond market open, Ruble)

* European indices are expected to rise at the open

* Tokyo ended in the green, US futures stable

* Chinese markets on the rise, good news on COVID-19

by Laetitia Volga

PARIS, June 27 (Reuters) – The main European stock markets are expected to rise on Monday 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 0.72% for the Parisian CAC 40 .FCHI , of 0.37% for the Dax in Frankfurt .GDAXI , of 0.49% for the FTSE in London .FTSE and of 0.28 % 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 institution’s president 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.

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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.

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The Dow Jones .DJI gained 2.68% to 31,500.68 points, the S&P-500

.SPX gained 3.06% to 3,912.03 points and the Nasdaq Composite .IXIC advanced 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 .N225 gained 1.43%, driven by heavyweights in the semiconductor sector.

In China, the Shanghai SSE Composite .SSEC gained 0.96% and the CSI 300 1.26% .CSI300 thanks to positive news on the health front.

Shanghai authorities on Sunday announced the reopening of dining halls in some neighborhoods 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 0.09% against a basket of benchmark currencies .DXY and the euro was almost unchanged at 1.0558 dollars. USD=

The ruble falls against the dollar as Russia looks set to default on its foreign currency debt, with some of its bondholders announcing they did not receive interest due on Monday following the expiry of the grace period. RUB=

US government bond yields are up nearly four basis points for the 10-year to 3.1621% which hit a two-week low of 3.005% last Thursday.

Its German equivalent DE10YT=RR gained three basis points to 1.466% in early trading.

OIL

The oil market is moving slightly lower with doubts about economic growth and demand for crude.

Brent LCOc1 lost 0.11% to 113 dollars a barrel and US light crude (West Texas Intermediate, WTI) CLc1 0.23% to 107.37 dollars.

NO MAJOR ECONOMIC INDICATOR ON THE DAY’S AGENDA

(Written by Laetitia Volga, edited by Tangi Salaün and Kate Entringer)



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