by Laetitia Volga
PARIS (Reuters) – Wall Street is expected to be in the red and European stock markets are moving in disorder mid-session on Monday after the highest recorded by the yields of benchmark government bonds, which divert investors from technology stocks but benefit to banks.
Index futures suggest a decline of 0.06% for the Dow Jones, 0.42% for the Standard & Poor’s and 0.81% for the Nasdaq.
In Paris, the CAC 40, heavily weighted by banking stocks, gained 0.72% to 6,595.3 at 11:18 GMT. In Frankfurt, the Dax lost 0.45% and in London, the FTSE lost 0.3%.
The pan-European FTSEurofirst 300 index lost 0.21%, the Eurozone EuroStoxx 50 was virtually unchanged and the Stoxx 600 fell 0.38%.
The general market context remains dominated by the same concerns as in past weeks, from the war in Ukraine to the risk of an economic slowdown, including the tightening of monetary policies by the major central banks and the health situation in China.
The European Central Bank (ECB) is meeting its Governing Council on Thursday and should continue to prepare the ground for an increase in key rates; Faced with record inflation in the euro zone, the money markets are expecting a rise of 70 basis points in total by December.
The monthly figures for consumer prices in the United States in March, expected on Tuesday, are the other major event of the week for the markets.
Investors are also preparing for the quarterly results of companies with in particular the turnover of the luxury giants LVMH and Hermès but also the accounts of the major American banks, whose profits are expected to fall by around 35% compared to the last year according to Refinitiv IBES.
INQUIRY-The Fed will rapidly tighten policy in the coming months
RATE
Expectations of rapid normalization of monetary policies continue to support bond yields: that of ten-year Treasuries takes four basis points to 2.7553% after a high of more than three years at 2.7840%.
In Europe, the ten-year German paper yield gained more than seven basis points to 0.792% after peaking at 0.798%, the highest since February 2018. Its French equivalent reached its highest level since July 2015 at 1.309% before returning to 1.286%.
The yield spread between the ten-year French bond and the Bund of the same maturity narrowed to 50.1 basis points after the results of the first round of the presidential election in France, which gave the incumbent, Emmanuel Macron, clearly in head. WALL STREET VALUES TO FOLLOW
Growth stocks such as Meta Platforms and Microsoft drop more than 1% in the forefront.
VALUES IN EUROPE
The European high-tech sector index (-1.3%) is also suffering from the rise in bond yields, unlike the banking sector, up 1.11%.
In Paris, Crédit Agricole and BNP Paribas take 2.18% and 3.35% respectively.
Societe Generale advances 6.79%, the biggest rise in the Stoxx 600, after announcing its withdrawal from Russia with the sale of its stake in Rosbank and its insurance subsidiaries to Interros Capital.
On the downside, tire maker Nokian Tires fell 12.36% after saying new European Union sanctions against Russia will have a big impact on its production.
CHANGES
After seven rising sessions, the “dollar index”, which measures the variations of the greenback against a basket of reference currencies, is stable.
The euro, at 1.0904 dollar, gained 0.26%, traders welcoming with relief the advance of Emmanuel Macron in the first round of the French presidential election.
For its part, the pound sterling briefly lost ground against the dollar in reaction to the sharper than expected slowdown in British economic growth in February, to 0.1% after 0.8% in January and against 0.3% expected. .
OIL
After two consecutive weeks of declines, oil prices continue to fall as International Energy Agency countries draw on their strategic crude reserves and China’s surge in COVID-19 cases.
The barrel of Brent fell by 3.07% to 99.62 dollars and that of American light crude (West Texas Intermediate, WTI) by 3.55% to 94.77 dollars.
(Laetitia Volga, editing by Marc Angrand)
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