by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to rise cautiously on Tuesday and European stocks are also moving in the green mid-session amid high volatility as investors continue to digest announcements on U.S. regional banks and await monthly data on inflation in the United States.
New York index futures signal a Wall Street open up 0.60% for the Dow Jones, 0.72% for the Standard & Poor’s 500 and 0.67% for the Nasdaq, but the trend is very variable.
In Paris, the CAC 40 took 0.64% to 7,056.63 points around 11:50 GMT after also spending part of the session in the red. In Frankfurt, the Dax advanced by 0.88% and in London, the FTSE was stable.
The pan-European FTSEurofirst 300 index gained 0.4%, the eurozone EuroStoxx 50 0.76% and the Stoxx 600 0.5%.
The VIX volatility index, considered the barometer of fear, is stable around 11:50 GMT but remains at high levels after having jumped the day before in session above 30 points, at a peak since October.
Its European equivalent, which on Monday recorded its strongest increase in nine months over two consecutive sessions, remains above 25 points.
Markets have been jittery since Friday announced the closure of SVB Financial Group, which operates as Silicon Valley Bank (SVB). This closure was followed by that of another bank in New York, Signature Bank, and before that of Silvergate Capital, leading to strong distrust of regional banks while the American authorities, including President Joe Biden himself. even are working to reassure the soundness of the financial system.
The rout of the banks, however, leads investors to expect a lull in the monetary tightening of central banks, starting with the US Federal Reserve (Fed) which meets next week. Its chairman, Jerome Powell, having said that the evolution of interest rates will depend on economic data, the US inflation figures expected at 12:30 GMT are particularly awaited as some investors believe that the peak of rates is now close.
The Reuters consensus forecasts a slowdown in consumer prices in the United States in February to 0.4% over one month and 6.0% over one year.
“The market now expects the Fed to be forced to slow further rate hikes or even pause this month to restore financial stability,” said Susannah Streeter, director of foreign exchange and financial markets. at Hargreaves Lansdown.
In Britain, where wage growth in the three months to January slowed to 6.5% year-on-year, markets are also speculating that the end of the Bank of England’s rate hike is imminent ( BoE) which meets next week.
In the euro zone, investors will learn on Thursday of the decision of the European Central Bank (ECB) in the matter.
In the meantime, short-term bond yields in the United States and Europe are particularly volatile on Tuesday after their sharp decline the day before, while the dollar rises and gold falls, signs of uncertainties in the financial markets.
VALUES IN EUROPE
In Europe, real estate (+2.25%), sensitive to variations in interest rates, leads the Stoxx with in particular Unibail-Rodamco (+2.65%), while banks (+0.08%) are struggling to regain ground after two strong declines.
Credit Suisse, which fell to a historic low on Monday, is still loose, by 1.95%, the publication of its annual report showing a stabilization of outflows of funds but not a reversal as well as “significant weaknesses” in its internal controls.
In other corporate news, Vivendi fell after the announcement of exclusive negotiations with Czech businessman Daniel Kretinsky for the sale of Editis, while Casino advanced 1.99% after the announcement of the sale of part of the stake in the Brazilian supermarket chain Assaí.
Elsewhere in Europe, Volkswagen, which announced Tuesday its intention to invest 180 billion euros over the next five years, yields 2.56%, the largest drop in the Dax. Jefferies analysts point to the weakness of the automotive group’s fourth quarter results during the presentation of its strategic plan.
RATE
Short-term bond yields are volatile after their very sharp drop the previous day as investors try to assess the impact of the SVB collapse on central bank decisions.
The yield on the two-year German Bund fluctuates within a range of 2.425% to 2.837% while the ECB’s terminal rate is now expected at around 3.3% in October against more than 4% previously.
That of two-year US Treasury bills, which dropped 56 basis points on Monday, the largest drop in one session since 1987, fluctuates from 3.83% to 4.278%.
CHANGES
The dollar regained a small chunk of lost ground on Monday, gaining 0.039% against a basket of benchmark currencies ahead of US inflation data.
The euro fell to 1.0723 dollars (-0.06%), after hitting a one-month high on Monday against the greenback at 1.075 dollars.
OIL
Oil prices fell sharply in fear of a new financial crisis: Brent fell 1.6% to 79.48 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.95% to 73.34 dollars .
METALS
Gold, a safe haven, is back from a peak of more than five weeks hit on Monday, and is displayed at 1,904.61 dollars (-0.45%), above the support of 1,900 dollars an ounce.
(Written by Claude Chendjou, edited by Kate Entringer)
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