by Marc Angrand
PARIS (Reuters) – Wall Street is expected to be down slightly and European stock markets fell mid-session on Monday, as concerns about inflation and the announced tightening of monetary policies once again discouraged risk taking.
Futures contracts on the main New York indices signal an almost stable opening for the Dow Jones but down 0.16% for the Standard & Poor’s 500 and 0.39% for the Nasdaq.
In Paris, the CAC 40, which gained up to 0.42% at the start of the session, lost 0.37% to 7,192.58 points around 11:45 GMT. In London, the FTSE 100 lost 0.12% and in Frankfurt, the Dax fell 0.35%.
The EuroStoxx 50 index is down 0.38%, the FTSEurofirst 300 0.42% and the Stoxx 600 0.44%.
After the monthly employment report in the United States on Friday, which fueled expectations of an interest rate hike by the Federal Reserve as early as March, the markets are cautiously awaiting the monthly US consumption, scheduled for Wednesday and whose annual increase could have reached 7% in December according to the Reuters consensus.
“The Fed is likely to feel pressured by this further price increase and may feel compelled to start the rate hike cycle as soon as it meets in March,” said Elsa Linos, head of currency strategy at RBC Capital Markets.
Fed Chairman Jerome Powell and Governor Lael Brainard are also to be heard in the Senate on Tuesday for the first, Thursday for the second.
Goldman Sachs now expects four US rate hikes this year, one more than before, and expects the Fed to start reducing its balance sheet as early as July, if not sooner.
The International Monetary Fund (IMF) for its part warned emerging countries against the risk of financial turbulence with the announced rise in US rates.
RATE
This context continues to favor the upward movement in bond yields which has already marked the first week of the year: that of ten-year US Treasury bonds, at 1.7692%, remains close to the nearly two-year peak reached at the start of the day at 1.808%.
Its German equivalent reached its highest level since May 2019 at -0.025% before returning to -0.05%.
VALUES IN EUROPE
On the equities side, the rise in yields once again benefits banks, whose Stoxx index gains 0.7% but the largest sectoral increase at mid-session is for the transport and leisure compartment (+ 2.36%) , which is continuing the rebound that began at the end of December.
In Paris, ADP (+2.90%) and Air France-KLM (+3.67%) are among the biggest increases in the SBF 120 index and on the bank side, Crédit Agricole won 2.2%.
The penalty of the day is for Atos, which fell 17.18% after announcing that it had not met its 2021 objectives.
The consulting group thus weighs down the high-tech sector, which fell by 1.2%.
CHANGES
The dollar, which had suffered from the lower than expected number of job creations in the United States, showing its largest drop in a session for six weeks, started to rise again against the other major currencies (+0.18%) without regaining all of the ceded land.
The euro fell to 1.1328 dollars against 1.1364 at its highest on Friday in session.
OIL
The oil market, which was progressing at the start of the day, also fell into the red in the morning in Europe, erasing part of its comfortable gains (+5%) of last week.
Brent fell 0.16% to 81.62 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.19% to 78.75 dollars.
NO MAJOR ECONOMIC INDICATOR ON THE DAY’S AGENDA
(Written by Marc Angrand, with Julien Ponthus in London, edited by Blandine Hénault)