Markets: new pressure on rates, equities are reversing


Paris (awp/afp) – A tight bond market again and doubts about growth and inflation hurt the equity markets on Wednesday, the indices giving back some of their gains from the start of the week.

Wall Street was down in early trade, including the tech sector, sought after earlier this week. The Nasdaq lost 1.90%, the S&P 500 1.54% and the Dow Jones 1.19% around 1:45 p.m. GMT.

This dragged the European markets: after opening slightly higher, Paris now fell by 0.95%, London by 0.53% and Frankfurt by 0.75%. In Zurich, the SMI yielded 0.89%.

On Tuesday, the markets were optimistic after signs of a gradual deconfinement in China and good American statistics, showing in particular that consumers continued to spend despite high inflation.

But again, investor sentiment turned around overnight.

“There are the gloomy forecasts from central banks, with the US Federal Reserve now aiming for a soft landing that looks a lot like the pre-recession stage. Maybe it’s time to buckle up and prepare for a very hectic,” warns Oanda analyst Craig Erlam.

In the United States, the president of the American central bank Jerome Powell recalled Tuesday that his institution will have to act in a “more aggressive” way if American inflation does not decelerate quickly enough.

Enough to push up the yields of US Treasury bonds on Wednesday: the short-term one (2 years), very sensitive to inflation, rose to 2.71% and the long-term one (10 years) was again approaching the bar of 3%, to 2.96%.

The Federal Reserve (Fed) began in March to raise its key rates in order to slow down inflation, which is at its highest in 40 years in the United States. Further hikes should be decided at the next two Fed meetings, in mid-June and at the end of July.

In the euro zone, inflation stabilized at 7.4% over one year in April, a level which remains well above the 2% target of the European Central Bank (ECB), according to Eurostat. In the United Kingdom, inflation jumped to 9% in April over twelve months, a record in 40 years.

The ECB has not yet tightened its rates, but the probability that it will do so as early as July has increased as evidenced by the German two-year borrowing rate, the highest since 2011.

Takeover intention at Siemens Energy ___

The German group Siemens Energy announced on Wednesday its intention to buy back all the missing shares of its problem subsidiary Siemens Gamesa, a specialist in wind power, with a view to withdrawing it from the stock market. Siemens Energy shares rose 1.99%.

The other stocks in the sector were doing well, such as EON (+1.98%), RWE (+2.86%) and Engie (+1.50%).

Capital increase for TUI ___

The world number one in tourism TUI sank by 12.11%, after announcing on Tuesday a capital increase to reimburse an additional tranche of 671 million euros in public aid obtained from the German State at the start of the Covid pandemic. -19.

Stronger oil and dollar ___

Oil prices were up on Wednesday, driven by the risk of a disruption in the supply of Russian hydrocarbons and good macroeconomic indices from the United States, the leading consumer country of crude.

Around 1:30 p.m. GMT, a barrel of Brent from the North Sea for delivery in July gained 0.63% to 112.63 dollars.

A barrel of US West Texas Intermediate (WTI) for delivery in June rose 0.85% to 113.34 dollars.

The US dollar was on the rise again on Wednesday on market risk aversion, with the British pound particularly suffering after jumping the day before. Around 1:30 p.m. GMT, the pound lost 0.66% to 1.2410 dollars.

The euro crumbled 0.27% to 1.0521 dollars.

Bitcoin lost 1.90% to $29,500.

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