by Marc Angrand
PARIS (Reuters) – Wall Street is expected to be down slightly and European stock markets lost ground mid-session on Thursday, the rise in stocks linked to raw materials and energy, whose prices continue to soar, only offsetting partly the decline of other sectors in the face of the economic and financial fallout from the war in Ukraine and Western sanctions.
Futures contracts on the main New York indices predict a decline of 0.12% for the Dow Jones, 0.27% for the Standard & Poor’s 500 and 0.41% for the Nasdaq.
In Paris, the CAC 40 lost 0.34% to 6,476.21 points at 11:50 GMT but remained above the lowest in more than seven months hit on Wednesday at 6,312.30. In London, the FTSE 100 lost 0.53% and in Frankfurt, the Dax fell 1.04%.
The EuroStoxx 50 index is down 0.78%, the FTSEurofirst 300 0.39% and the Stoxx 600 0.69%.
The time remains for caution in the absence of signs of hope for a diplomatic solution to the armed conflict in Ukraine and while the threat of slowed growth coupled with an acceleration of inflation is becoming more and more precise.
“The volatility observed in recent days reflects the uncertainty as to the outcome of this war – duration of the military conflict, energy shock and sanctions, the situation remaining relatively binary until today”, explains Nadège Dufossé, head of Multi- Asset of Candriam.
“Armed conflicts do not have a lasting and significant impact on markets, except when they lead to an energy crisis…which is at stake today.”
OIL
Nothing seems to be able to stop the rise in oil prices for the moment, fueled by sanctions targeting Russian refineries, disruptions in maritime trade and the drop in American stocks, which have fallen to their lowest level since 2018 at the terminal. of Cushing, main reference of the futures market.
Brent rose 1.85% to $115.02 a barrel after hitting 119.84, its highest level since May 2012; American light crude (West Texas Intermediate, WTI) took 2.67% to 113.55 dollars after a peak at 116.57, unheard of since 2008.
The rise in Brent reached 37% over the last 30 days and it is probably not over: the Australian bank ANZ raised its short-term price forecast to 125 dollars a barrel.
RAW MATERIALS
The surge in prices also continues on the other markets for industrial and agricultural raw materials: aluminium, coal and palm oil all set records, nickel is at its highest for 11 years and the price of wheat US on the futures market, at its highest for 14 years, has jumped 25% since the start of the week.
Russia and Ukraine accounted for 28.5% of global wheat exports in 2021 according to US Department of Agriculture estimates.
VALUES IN EUROPE
On the equity side, the commodities sector took full advantage of this surge with a 2.36% increase in the Stoxx index of basic resources, the only sectoral increase marked at mid-session.
Conversely, the utilities sector (-2.41%), the automotive sector (-2.07%) and the transport and leisure sector (-1.68%) are once again in sharp decline.
Among the stocks directly exposed to Russian risk, Engie lost 5.25%, the largest drop in the CAC 40, after specifying that the Nord Stream 2 gas pipeline file could cost it 987 million euros and Societe Generale gave up 1.67 % after warning of the risk of losing ownership of its banking assets in Russia.
Lufthansa, for its part, lost 6.02% because it was unable to provide forecasts for this year.
On the rise, LSE Group, the operator of the London Stock Exchange, gained 7.19% after ensuring that the impact of the sanctions on its activities would be limited.
RATE
Yields on US government bonds are down slightly after the sharp rise the day before in response to statements by Jerome Powell, the chairman of the Federal Reserve, which confirms the scenario of a rate hike in two weeks. The ten-year is displayed at 1.8577%, the two-year at 1.494%.
On the other hand, the trend is towards higher yields on the European bond market, the prospect of an acceleration in inflation fueling speculation on the strategy of the European Central Bank.
The yield on the German ten-year Bund rose three basis points to 0.05% and its French equivalent by more than four points to 0.536%.
Investors will carefully study the minutes of the latest ECB meeting, which will be released at 12:30 GMT.
CHANGES
The euro continues to suffer from concerns related to the sanctions against Russia and their future impact on the economy of the region: it depreciates by 0.31% against the dollar at 1.1086, the lowest since June 2020, and it fell against the pound to its lowest level since 2016, at 82.76 pence.
The greenback appreciated by 0.27% against a basket of benchmark currencies but remained below the 21-month high reached in session on Wednesday.
(Report Marc Angrand, edited by Blandine Hénault)