by Laetitia Volga
PARIS (Reuters) – Wall Street is expected to rise and European stock markets posted a sharp increase on Wednesday mid-session, offering a respite after the heavy losses suffered since the Russian attack in Ukraine while oil prices are falling again also thanks to cheap purchases.
Futures contracts point to an opening up 1.52% for the Dow Jones, 1.72% for the S&P-500 and 2.11% for the Nasdaq. In Paris, the CAC 40 gained 4.53% to 6,232.94 around 12:45 GMT. In Frankfurt, the Dax rose by 4.92% and in London, the FTSE by 1.56%.
The pan-European FTSEurofirst 300 index rose by 2.97%, the EuroStoxx 50 of the euro zone by 4.79% and the Stoxx 600 by 2.93%.
Stocks are picking up again despite the announcement of new sanctions against Moscow for the invasion of Ukraine. The rebound is driven by the decline in oil prices, most industrial metals and cheap purchases of equities which have suffered particularly since the start of the conflict.
Despite this, investors remain concerned about the consequences of the Ukrainian crisis on the economic outlook.
Credit Suisse halved its forecast for eurozone gross domestic product (GDP) growth to 1%.
The European Central Bank (ECB) is meeting on Thursday and facing the specter of ‘stagflation’, money markets are expecting it to postpone raising rates until the end of the year.
“We expect very little from the ECB this week. The situation is too uncertain and the negative impact (of the Ukrainian crisis) on economic growth is impossible to assess at the moment, nor for the medium-term inflation forecast. This does not mean a ‘dovish’ meeting as we expect ECB President Christine Lagarde to reiterate the institution’s desire to reduce its dovish stance during 2022,” François Rimeu said in a note. senior strategist at La Française AM.
OIL
After several sessions of strong increases and highs of nearly 14 years, oil prices are falling despite the US embargo on Russian energy.
“The realization that the ban on US imports might not worsen the current supply shock may have played a role in these profit takings,” said Tamas Varga at PVM.
The barrel of Brent lost 2.91% to 124.26 dollars and that of American light crude (West Texas Intermediate, WTI) 3.29% to 119.63 dollars.
WALL STREET VALUES TO FOLLOW
VALUES IN EUROPE
Apart from the European compartments of basic resources (-1.84%) and energy (-1.92%), all sectors are up.
The Stoxx automobile index posted the biggest increase with a gain of 7.35%. The banking and transport and leisure sectors follow, up 5.47% and 5.96% respectively.
These sectors have been “battered, they can’t keep falling. What we’re seeing is a slight reprieve. I don’t think this is the start of a big turnaround,” said Craig Erlam, analyst at OANDA.
At the top of the Parisian index, Renault gained 10.42% ahead of Stellantis (+9.56%) and Société Générale (+8.73%).
Among the biggest increases in the Stoxx 600, Adidas takes 11.01% after the publication of its results. [nL5N2VC1FI]
RATE
On the bond market, the yield of the German Bund jumped five basis points to 0.169% and its French equivalent gained four points to 0.597%. They are both playing at their highest level since February 28.
“A possible European plan to jointly issue debt to finance energy and defense (…) weighs on the bonds of the richer countries which will bear the brunt of an increase in public spending,” said Fabio Castaldi, manager at Pictet Asset Management.
“Despite tentative denials, markets believe the EU will discuss and release details of such a plan in the coming days,” he added.
In the United States, the yield on Treasuries with the same maturity advanced by three basis points, to 1.9061%.
CHANGES
The dollar fell 0.47% against a basket of benchmark currencies and the euro advanced 0.77% against the greenback, to 1.0983.
The single currency fell to its lowest level since May 2020 at $1.0804 on Monday.
Bitcoin climbs 8.02% as the US president is due to sign an executive order today to study cryptocurrencies and the risk-benefits of implementing a digital dollar.
NO KEY ECONOMIC INDICATOR ON TODAY’S AGENDA
(Laetitia Volga, edited by Blandine Hénault)