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Wall Street expected in the red, China worried – 08/15/2022 at 13:42


EUROPEAN STOCK EXCHANGES HESITANT MID-SESSION

by Laetitia Volga

PARIS (Reuters) – Wall Street is expected to fall and European stock markets are hesitating on Monday mid-session after a series of Chinese economic indicators below expectations.

Futures contracts signal a decline of 0.5% for the Dow Jones, 0.44% for the Standard & Poor’s-500 and 0.24% for the Nasdaq.

In Paris, the CAC 40 gained 0.2% to 6,567.14 around 10:55 GMT. In Frankfurt, the Dax grabbed 0.08% and in London, the FTSE lost 0.1%.

The pan-European FTSEurofirst 300 index rose 0.21%, the Eurozone EuroStoxx 50 0.18% and the Stoxx 600 0.25%.

China’s July industrial production and retail sales figures released on Monday came in below market expectations, illustrating the impact of COVID-19 outbreak restrictions on the world’s second-largest economy.

In an effort to support growth, the People’s Bank of China unexpectedly lowered its key policy rates.

“Initially, it’s seen as encouraging the economy, but if you cut rates, it can also be seen as an admission that your economy needs help,” said David Madden at Equiti Capital.

ING lowered its growth estimate for China’s economy to 4% from 4.4% previously, and warned that a further downgrade to its forecast was possible depending on the impact of inflation on exports, health restrictions and growing unemployment in mainland China.

For investors, one of the main economic events of the week will be the publication on Wednesday of retail sales in the United States and the minutes of the last meeting of the Federal Reserve.

VALUES IN EUROPE

With concerns about the growth of the Chinese economy, the automotive and raw materials sectors, which are very exposed to China, fell by 0.56% and 1.33% respectively.

Oil stocks are suffering from the decline in crude oil prices for the second session in a row: TotalEnergies drops 1.64% and Shell 2.08%. The sector as a whole lost 1.4%.

Higher, HelloFresh climbs 5.33% after confirming its medium-term objectives and saying it is “cautiously optimistic” for the second half despite inflation and a slowing economy and Henkel takes 0.93% after having raised its annual revenue growth target.

The pharmaceutical group AstraZeneca gains 2.78% after announcing that a trial has confirmed the benefit of the drug Enhertu, developed with the Japanese Daiichi Sankyo, in patients with an advanced form of breast cancer and previously treated with another treatment.

OIL

Oil prices fell sharply, penalized by a potential increase in production by Saudi Aramco, as mentioned by the chief executive of the oil giant, and by concerns about signs of a slowdown in the economy in China.

The market also expects by midnight Iran’s response to the European Union’s proposal to relaunch talks to save the 2015 nuclear deal, which could increase global supply.

Brent lost 4.66% to 93.58 dollars a barrel and American light crude (West Texas Intermediate, WTI) lost 4.82% to 87.65 dollars.

EXCHANGES/RATES

In the foreign exchange market, economic indicators below expectations fuel fears of recession, which benefits the dollar, up 0.6% against a basket of benchmark currencies and

The euro fell to $1.0201, close to a one-week low reached earlier at 1.0185.

Concerns relating to China but also to the supply of gas to Germany favor government bonds in Europe. The ten-year Bund yield lost nearly four basis points to 0.955%.

In the United States, the ten-year fell two points to 2.8276%.

(Written by Laetitia Volga, Editing by Kate Entringer)



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