EUROPEAN STOCK MARKETS FALL AT MID-SESSION
by Marc Angrand
PARIS (Reuters) – Wall Street is expected to fall sharply and European stocks remain on the downside mid-session on Tuesday, with improving investor sentiment in Germany far from enough to reassure markets about rising yields. bonds while the price of a barrel of Brent is rising to its highest level in seven years.
Futures on major New York indices are signaling an opening down 0.69% for the Dow Jones, 1.11% for the Standard & Poor’s 500 and 1.78% for the Nasdaq after the weekend. extended end of Martin Luther King Jr Day.
In Paris, the CAC 40 lost 1.06% to 7,125.00 points around 11:55 GMT. In London, the FTSE 100 lost 0.61% and in Frankfurt, the Dax dropped 1%.
The EuroStoxx 50 index fell back by 0.96%, the FTSEurofirst 300 by 0.99% and the Stoxx 600 by 1.08%.
A week before the Federal Reserve’s monetary policy meeting, the outlook for monetary policy tightening is once again at the forefront of investors’ concerns, with some analysts no longer ruling out a further acceleration of the end of asset purchases by the central bank ahead of the first rate hike expected in March.
Questions about rising prices are also fueled by announcements from the Bank of Japan, which reaffirmed the accommodating nature of its policy but raised its inflation forecast.
The nervousness is all the more marked as the markets are about to enter for good in the period of publication of results. After the mixed announcements of JP Morgan Chase and Citigroup on Friday, it is Goldman Sachs which must present its accounts before the opening.
The only significant positive signal of the day: the stronger-than-expected rebound in the ZEW index of investor sentiment in Germany, to 51.7 from 29.9 in December.
WALL STREET VALUES TO FOLLOW
VALUES IN EUROPE
Almost all of the major sectors of the European rating are evolving in the red, one of the rare exceptions being for that of energy, whose Stoxx index gains 0.72% thanks to the marked rise in oil prices.
In Paris, TotalEnergies (+1.12%) leads the CAC 40, TechnipFMC takes 2.59%, CGG 0.33%.
The price of the barrel weighs on the contrary on the values of transport and leisure (-2.20%): Lufthansa yields 1.67%, Air France-KLM 1.31%.
The high technology compartment, still sensitive to expectations of rising interest rates, lost 1.97%; Worldline drops 3.49%, Dassault Systèmes 2.2%.
According to Bank of America’s monthly survey, overweight positions in “techs” are at their lowest since December 2008, with net allocations to banks near record highs.
The banking sector, which generally benefits from the rise in interest rates, only manages to limit its decline (-0.26%).
RATE
The yield on two-year US Treasuries, the most sensitive to changes in policy rate expectations, jumped more than seven basis points to 1.0323%, the highest since February 2020, and the ten-year , at 1.8162%, gains more than four points, to a two-year high.
The ten-year German is displayed at -0.031% after rising to -0.002%, a new test of the zero threshold under which it has been evolving since May 2019.
CHANGES
Rising yields provide strong support for the dollar, which appreciated 0.11% against other major currencies.
The Bank of Japan’s announcements, highlighting the differences in strategy with the Fed, penalized the yen at the same time, which enabled the greenback to cross the 115 yen threshold at the start of the day.
The euro fell back below $1.14 despite the positive surprise from the ZEW index.
OIL
Crude prices are boosted by the renewed geopolitical tension after the attack attributed to Houthi rebels in the United Arab Emirates, which has fueled fears linked to the global supply of crude.
Brent crude gained 1.2% to $87.52 a barrel after hitting 88.13, its highest level since 2014, and US light crude (West Texas Intermediate, WTI) 1.63% to $85.19 after a peak at 85.74.
Goldman Sachs, in a new study, estimates that the price of a barrel of Brent could reach 100 dollars in the second half.
(Report Marc Angrand, edited by Blandine Hénault)