by Marc Angrand
PARIS (Reuters) – Wall Street is expected to fall and European stock markets widen their losses mid-session on Monday, the announcement by NATO of the dispatch of reinforcements to Eastern Europe accentuating the risk aversion of the investors, already marked two days before the US Federal Reserve’s monetary policy decisions.
Futures on major New York indices, which were trending higher at the start of the day, are now signaling a decline of 0.17% for the Dow Jones, 0.14% for the Standard & Poor’s 500 and 0.23% for the Nasdaq.
In Paris, the CAC 40 lost 1.78% to 6,942.60 points around 11:55 GMT, the lowest since December 21. In London, the FTSE 100 lost 1.17% and in Frankfurt, the Dax fell 1.84%.
The EuroStoxx 50 index is down 2.05%, the FTSEurofirst 300 2.02% and the Stoxx 600 2.1%.
The US VIX volatility index jumped 4.75%, the highest in a month and a half.
The Secretary General of NATO announced at the beginning of the morning the dispatch to Eastern Europe of reinforcements including warships and fighter planes, stressing that the alliance would take “all necessary measures to protect and defend all its allies”.
For its part, the Kremlin accused the United States and its allies of contributing to the escalation in the region, adding that the likelihood of an armed conflict in eastern Ukraine was higher than ever.
This new surge of tension between the West and Russia is prompting many investors to retreat, at least temporarily, to safe havens, which translates into a rise in the dollar like gold and a drop in bond yields. ‘State.
It thus adds to the already long list of reasons for caution on the markets, hitherto dominated by expectations of monetary tightening in the United States and questions about the impact of the Omicron variant of the coronavirus.
The economic indicators of the day were hardly reassuring: the first results of the monthly PMI surveys by IHS Markit show a slowdown in the growth of activity in Europe, a development which confirms the scenario of a slowdown in growth in the first trimester.
VALUES IN EUROPE
The transport and leisure sector (-3.93%) is the most affected by the general decline in equities, a consequence of the fall in the prices of several air transport stocks such as IAG, which lost 4.44%, Ryanair (- 4.12%) or Wizz AIr (-4.85%).
The technologies also continue their correction after the sharp decline of the Nasdaq on Friday: their Stoxx index drops 3.65%, the German Infineon 4.04%, the French Worldline 5.73%, the Dutch ASML 4.43%.
The commodities compartment fell by 3.37% with the marked drop in the prices of base metals (-4.5% for nickel, -1.9% for copper).
On the rise, Vodafone gained 6.01% after reports from Reuters on discussions with Iliad in Italy and Orange took 1.65% after reports at the weekend on the now almost certain appointment of Christel Heydemann as general manager.
RATES Stable at the opening, yields on European benchmark government bonds took a nosedive after NATO’s announcements, which favor purchases of risk-free securities.
That of the ten-year German Bund thus fell by almost three basis points to -0.083%, the lowest for ten days and its American equivalent fell to 1.7404%.
The fall is more marked for the ten-year Italian, which yields more than four points to 1.33% as the process of electing the new President of the Republic begins in Rome.
EXCHANGES The dollar took advantage of its status as a safe haven and rose by 0.27%, its highest level in two weeks, against a basket of reference currencies, a movement that pushed the euro back below 1.1310 and accentuated the decline of the pound sterling.
General overnight risk aversion also fueled the fall in bitcoin, which fell below $34,000, the lowest since last July and more than 50% below its November peak.
OIL
On the rise at the start of the session after the announcement by the United Arab Emirates of the destruction of two missiles targeting their territory, fired according to their army by the Houthis in Yemen, the oil market then turned around with the appreciation of the dollar.
Brent thus dropped 0.02% to 87.87 dollars a barrel after peaking at 88.90 and American light crude (West Texas Intermediate, WTI) lost 0.09% to 85.06 dollars.
(Report Marc Angrand, edited by Blandine Hénault)
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