STOCK GROWTH CONTINUES, DOLLAR DOWN
by Laetitia Volga
PARIS (Reuters) – Wall Street is expected to open higher on Monday, European stocks rose mid-session while the dollar is down on the prospect of monetary tightening a little less aggressive than expected in the United States. Futures on major New York indices are signaling an opening up 1.06% for the Dow Jones, 1.04% for the Standard & Poor’s 500 and 1.25% for the Nasdaq. In Paris, the CAC 40 gained 1.52% to 6,127.89 around 11:45 GMT. In Frankfurt, the Dax is up 1.43% and in London, the FTSE is up 1.28%.
The pan-European FTSEurofirst 300 index gains 1.35%, the EuroStoxx 50 in the euro zone advances by 1.48% and the Stoxx 600 by 1.39%.
Overall, market sentiment continues to benefit from the prospect of a Federal Reserve rate hike of “just” 75 basis points at its July 27 meeting, as U.S. central bank officials said voiced their opposition to a bigger hike last week despite accelerating inflation.
On Thursday, the European Central Bank is expected to kick off a rate hike cycle, starting with a quarter-point hike. Observers will also be very attentive to the characteristics of the anti-fragmentation tool that will be presented to alleviate the pressure on the borrowing costs of the most indebted members of the eurozone.
“This new instrument will have to be effective, while being proportionate and containing sufficient safeguards to maintain Member States’ momentum towards sound fiscal policy. Whether the consensus in the Council is strong enough to provide firepower remains to be seen. sufficient to defend this level and reduce the risk of financial fragmentation”, said Alexandre Hezez, strategist of the Richelieu Group.
“In our opinion, the reinvestment of the PEPP (Emergency Pandemic Purchase Programme) seems too low and an additional tool of at least 200 billion euros should be necessary,” he added in a statement. note. Attention this week, which promises to be rich, will also focus on the planned resumption of the delivery of Russian gas via the Nord Stream 1 gas pipeline, on the declaration of the President of the Italian Council, Mario Draghi, in Parliament on Wednesday and on a burst of business results.
Of the 35 S&P-500 companies that reported results, 80% did better than analysts expected, according to Refinitiv. WALL STREET VALUES TO FOLLOW
Bank of America fell more than 1% in pre-market after posting a 34% drop in quarterly profit, due to a fall in income from its investment banking activity.
Goldman Sachs must also announce its results before the opening and IBM after the close.
VALUES IN EUROPE
In Europe, all sectors are in the green. That of energy gains 2.73%, thanks to the rise in oil prices, and that of basic resources takes 2.72%, supported by industrial metals after the announcement of support measures in China towards the market immovable.
In corporate news, Solvay gained 5.13% as the chemicals group said it expected record second-quarter results and raised its full-year guidance.
Nordea climbed 6.44% after posting operating profit above expectations in the second quarter.
EXCHANGES/RATES
The dollar index, which measures changes in the greenback against a basket of other currencies, continues to slide (-0.65%) as traders revise expectations of a Fed rate hike down by one percentage point next week.
The euro thus rose to 1.0147 dollars, the highest in a week.
On the bond market, the yield on ten-year US securities gained two basis points to 2.9503%. Its German equivalent takes eight points to 1.197%.
Amid political uncertainty in Rome, the ten-year yield spread between Germany and Italy reached a one-month peak at 234.50, before falling back to 224.3 .
“We expect volatility to remain high between rumors of Mario Draghi’s determination to step down and those of his continued tenure as Chairman of the Board,” UniCredit analysts said. “Any indications that may increase the likelihood of a snap election will be negative for Italian bonds and cause the spread to widen.”
OIL
Oil prices are rising as the weaker dollar and worries about insufficient supply take precedence over the prospect of a possible recession and a drop in demand in China due to the COVID-19 epidemic.
Brent rose 2.44% to 103.63 dollars a barrel and US light crude (West Texas Intermediate, WTI) 2.11% to 99.65 dollars.
(Written by Laetitia Volga, edited by Jean-Michel Bélot)