REBOUND IN SIGHT AT WALL STREET, EUROPE TRIES TO FOLLOW
by Laetitia Volga
PARIS (Reuters) – Wall Street is expected in the green at the open, which allows most equity markets in Europe to erase their losses on Thursday mid-session, although fears of an economic recession, reinforced by the sharper-than-expected slowdown in private sector activity in the euro zone, are still hovering. Futures contracts suggest an increase of 0.51% for the Dow Jones, 0.8% for the Standard & Poor’s-500 and 1.09% for the Nasdaq. In Paris, the CAC 40 gained 0.61% to 5,952.95 around 11:30 GMT, after losing up to 1.45% in session. In Frankfurt, the Dax dropped 0.23% and in London, the FTSE gained 0.25%.
The pan-European FTSEurofirst 300 index advanced by 0.08%, the EuroStoxx 50 in the euro zone by 0.43% and the Stoxx 600 gained 0.08%.
While Wall Street should rebound at the open the day after a slight decline and Europe is trying to do the same, this rebound is taking place against a backdrop of accumulating monetary and financial concerns. economic.
The European indices went through a bad patch in the morning, accentuated by the figures below expectations of the “flash” PMI indices in the euro zone in June, which reflect in particular the impact of inflation on activity.
“The PMI indices were much more disappointing than expected and the forward-looking elements of the survey (…) reinforced an unfavorable climate. New orders stagnated and entrepreneurs’ expectations fell to their lowest level since October 2020 , which points to weaker growth in the coming quarters,” said Ricardo Amaro, senior economist at Oxford Economics.
On Wednesday, the Chairman of the Federal Reserve, Jerome Powell, warned during his hearing in Congress of a risk of recession posed by the sharp rise in interest rates of the institution.
He will be heard again in Congress, from 2:00 p.m. GMT, before a committee of the House of Representatives this time.
The Fed is far from the only central bank to tighten its monetary policy in the hope of controlling inflation, the latest being that of Norway, which on Thursday raised its main key rate by half a point, twice as much as expected, its biggest rise since 2002, and warned that it was counting on a further rise in August.
WALL STREET VALUES TO FOLLOW
US growth stocks rise in front-end trades, helped by falling bond yields: Tesla is reported up 2% and Nvidia 1.5%
VALUES IN EUROPE
While several European compartments have turned upwards, such as energy (+0.87%), others seem more firmly anchored in the red, such as the automotive sector (-0.6% ) or banks (-0.8%), the latter being affected by the fall in bond yields.
Societe Generale and BNP Paribas lost about 1.8% in Paris while Deutsche Bank lost 3.99%.
Atos climbed 9.03%, taking advantage of information from BFM Business that the state would be in favor of a merger with Thales, itself up 1.06%.
RATES Yields on government bonds fell after having already fallen sharply the day before against a backdrop of economic fears: that of ten-year Treasuries lost three basis points to 3.1262%.
On the European market, the benchmark yields, that of the German ten-year and that of the French ten-year, fell, to 1.471% for the first and to 2.016% for the second, to their lowest level in two weeks.
CHANGES
The euro lost 0.61% to 1.0501 dollar, penalized by the poor figures of the PMI indices, which lead some traders to anticipate a less aggressive monetary tightening from the European Central Bank.
Money markets are now pricing in a 161 basis point rise in ECB rates by the end of the year from 176 on Monday.
“The ECB will therefore take note of the figures of the day but it will look for evidence that the picture they paint is materializing in concrete data before changing tactics,” said Stuart Cole at Equiti Capital.
The dollar recovers by 0.4% against a basket of reference currencies
OIL
The oil market retreated slightly as investors reconsidered the impact of a potential downturn in the economy and rate hikes by major central banks on demand for crude.
Brent lost 0.31% to 111.39 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.45% to 105.71 dollars.
On Wednesday, they fell 2.4% and almost 4% respectively.
(Written by Laetitia Volga, edited by Sophie Louet)