by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to be in disarray at the opening on Monday awaiting new economic data, while European stock markets attempt a timid mid-session rebound after last week’s strong risk-related turbulence politics in France.
New York index futures signal Wall Street opening down 0.18% for the Dow Jones and 0.10% for the Standard & Poor’s 500, while a gain of 0.09% is expected for the Nasdaq. Industrial production, retail sales, housing starts and activity indices are among the data expected this week in the United States.
In Paris, the CAC 40, which dropped more than 6% last week, rebounded by 0.31% to 7,526.56 around 11:30 GMT. In Frankfurt, the Dax gained 0.04%, while in London, the FTSE lost 0.08%.
The pan-European FTSEurofirst 300 index fell by 0.16%, but the eurozone’s EuroStoxx 50 advanced by 0.45% and the Stoxx 600 was practically stable (-0.07%).
The positive trend in Europe is driven on Monday by technology stocks (+0.72%), but caution remains in order, the volatility index on the EuroStoxx appearing above the threshold of 20 points, at 20.69, up 4.18%.
The European banking sector, which lost more than 8% last week, fell further, by 1.13%, while that of basic resources (-1.16%) was penalized by Chinese indicators which show growth. industrial production lower than expected in May.
Investors are concerned about the situation in France where Emmanuel Macron has called, to everyone’s surprise, early legislative elections which could lead to a victory for extremist parties, notably that of the National Rally. This is reflected on the financial markets by an increase in the cost of insuring the French debt against payment default (CDS) and a wider spread between the sovereign rates of Germany and France.
“We see that the divergence between European and American stocks is becoming very clear (…) France is the country that best reflects this situation due to the early elections,” writes Daniela Hathorn, market analyst at Capital.com.
“There is a lot of indecision and a lot of things that the markets have to take into account,” he adds.
In the United States, on the other hand, Goldman Sachs raised its end-of-year target for the S&P 500 index to 5,600 from 5,200 previously, which represents an increase of around 3.1% compared to Friday’s close.
VALUES IN EUROPE
Adidas fell 3.42% after information from the Financial Times according to which an investigation into allegations of large-scale corruption in China was opened against the German sports equipment manufacturer.
ING advances by 1.49%, the Dutch group having announced that it is targeting revenue growth of between 4% and 5% per year until 2027.
Topdanmark soars by 21.06% after an offer from the Finnish insurer Sampo (-2.6%) which values the Danish group at $4.7 billion.
RATE
The yield on the ten-year German Bund, the benchmark for the euro zone, rose on Monday by around three basis points (bps), to 2.387%, while that of France with the same maturity fell by around two points, at 3.1525%. The gap between these two bonds, however, remains high, at 76.14 bps.
Appearing to downplay the risk of fragmentation within the euro zone, sources told Reuters that five European Central Bank (ECB) officials have said the institution does not plan to discuss using its program purchase of emergency bonds. The ECB’s chief economist, Philip Lane, for his part judged that the turbulence on the bond market was not “disordered”.
In the United States, the yield on ten Treasury bills increased by 2.5 basis points to 4.2363% after a fall of 2.3 bps on Friday, linked to data showing a decline in inflationary pressures.
CHANGES
The dollar remains firm on Monday against a basket of reference currencies, around 105 points, while the euro trades at 1.0712 dollars, at a high of more than a month, in a context of increased uncertainties In France.
The European currency recorded its biggest weekly decline since April last week, with a decline of 0.88%.
“As traders want certainty, this may not happen before the second round (of the legislative elections on July 7), so the prospect of a further decline in the French and European markets is real,” notes Chris Weston, head of studies at Pepperstone.
OIL
Oil fell on Monday after uneven monthly economic data from China, with retail sales rising sharply while industrial production came in below expectations.
Brent fell 0.13% to $82.51 per barrel and American light crude (West Texas Intermediate, WTI) lost 0.18% to $78.31.
(Written by Claude Chendjou, edited by Blandine Hénault)
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