After having sold up to 3.62%, the Paris Stock Exchange reduced its losses. Vladimir Putin responded positively to a proposal from his Foreign Minister, Sergei Lavrov, to continue diplomatic efforts with the United States and their allies on the Ukrainian issue. Geopolitical tensions had escalated following comments by White House National Security Adviser Jake Sullivan on the risk of an imminent Russian intrusion into Ukraine. For its part, Kiev indicated this morning that its membership of the European Union and NATO remained a priority, a stone in the garden of Moscow which makes the promise of Ukraine’s non-membership of NATO a central requirement. It is in this context that the German Chancellor Olaf Scholz must go to Kiev on Monday, then to Moscow tomorrow.
James Bullard sticks to his guns
At 3:45 p.m., the Bedroom 40 fell by 2.81% to 6,814.49 points in a supplied volume of 3.1 billion euros. In Frankfurt on Dax down 2.35%. In New York, the Dow Jones yields 0.54, while the Nasdaq Composite is stable.
The risk of an abrupt normalization of the Fed’s monetary policy also remains relevant. James Bullard, president of the St. Louis branch, reiterated Monday that the central bank must respond quickly to accelerating inflation, which hit a 40-year high in the United States in January. A guest on CNBC’s Squawk Box, James Bullard said: ” our credibility is at stake and we must react to the statistics. However, I think we can do it in an orderly fashion and without disrupting the markets. “. He caused a shock when he said last week that he saw a 100 basis point hike in the Fed funds rate by the 1er July.
The Fed is also holding a meeting of its Board of Governors on Monday, the announcement of which on Friday fueled fears of rate hikes outside of scheduled FOMC meetings. It appears to be just a routine meeting, but a statement is expected later in the day.
Banks and airlines under pressure
In Europe, the 19 Stoxx 600 sector indices are in the red, starting with those of banks (-2.9%), leisure travel (-2.5%) and technology (-2.6%) .
Societe Generale and BNP Paribas lost 4.9% and 6.1% respectively, weighed down by a “flight to quality” in favor of government bonds whose yields eased due to geopolitical tensions. That of the 10-year US loan is back around 1.97%, against more than 2% at the end of last week. That of the German Bund of the same maturity relaxes by 4 basis points to 0.2350%.
The geopolitical risk affects airlines as several of them have suspended or diverted their flights to Ukraine. This is notably the case of KLM, the Dutch subsidiary ofAir France-KLM (-3.4%), while Lufthansa (-3.2%) is monitoring the situation closely. The sector is also affected by the high level of oil prices as the barrel of Brent crude hit a seven-year high of 96.16 dollars this morning before returning to around 94 dollars.
“High tech” and other growth stocks considered expensive are also among the biggest declines of the day, like Teleperformance (-3%) and LVMH (-2.8%).