New downturn in sight for European stock markets – 09/06/2022 at 07:35

New downturn in sight for European stock markets - 09/06/2022 at 07:35
EUROPEAN STOCK EXCHANGES EXPECTED SLIGHTLY DROP

EUROPEAN STOCK EXCHANGES EXPECTED SLIGHTLY DROP

PARIS (Reuters) – Major European stock markets are expected to fall slightly on Tuesday despite the small rebound expected on Wall Street after a three-day weekend, as fears of recession and the prospect of sharp rate hikes continue to dominate the headlines. and to weigh on the morale of investors in Europe.

Index futures suggest a decline of 0.09% for the Dax in Frankfurt, 0.23% for the FTSE 100 in London and 0.17% for the EuroStoxx 50. As for the CAC 40 in Paris, it could yield around 0.1% according to the first indications available.

Market sentiment remains influenced above all by the impact of the war in Ukraine and tensions in the energy market, which are fueling inflation while dampening economic activity, as both the new surge in gas prices and the decline in the European PMI indices, which confirm the recessionary scenario.

In such a context, the prospect of seeing the European Central Bank (ECB) on Thursday raise its rates by 50 or even 75 basis points is obviously not likely to encourage investors to start buying again.

In Australia, the RBA, as expected, raised its key interest rate by half a point to 2.35%, its fifth hike since May, and hinted that further hikes were possible even if its statement did not includes more reference to the “normalization” of monetary policy, which suggests that rates are approaching the neutral level.

The rest of the day will be driven mainly by the figures for industrial orders in Germany for July, then by the ISM services index in the United States.

VALUES TO FOLLOW:

AT WALL STREET

US stock markets are reported higher after the extended Labor Day weekend, which traditionally marks the end of the summer holiday period in the United States.

Futures contracts on the main New York indices are currently signaling an increase of 0.29% for the Dow Jones, 0.34% for the Standard & Poor’s 500 and 0.44% for the Nasdaq.

Last week ended with a decline of 2.99% for the Dow Jones, 3.29% for the S&P 500 and 4.21% for the Nasdaq, their third weekly decline in a row.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index climbed 0.04% less than an hour from closing, supported by cheap purchases after four consecutive sessions of decline.

The rise is much sharper in China, where the SSE Composite of Shanghai takes 1.09% and the CSI 300 0.62% after the declarations of several political and monetary leaders of Beijing suggesting that the power considers urgent new stimulus measures , a discourse that has already materialized in a reduction in foreign exchange reserves imposed on financial institutions.

The CSI real estate sector index thus rose by 1.95%.

EXCHANGES/RATES

The dollar lost 0.15% against other major currencies, a logical decline after the sharp rise of recent weeks (+4.5% since August 11).

The euro took the opportunity to rise to 0.995 dollars (+0.24%) after the low of 20 years hit Monday at 0.9876.

The pound sterling remains well oriented a few hours before the official appointment of Liz Truss as Prime Minister, despite her first speech focusing on the promise of lower taxes, which bodes ill for public finances.

The Australian dollar also gained 0.1% after the widely anticipated RBA rate hike.

RATE

Yields on US Treasuries are up in Asian trading, at 3.2386% for the ten-year and 3.4616% for the two-year. Both had fallen sharply on Friday after the monthly report on US employment, considered mixed by investors.

OIL

The price of Brent fell 0.74% to 95.03 dollars a barrel, erasing some of the gains made on Monday after the OPEC + decision to cut production by 100,000 barrels per day in October, a gesture perceived as essentially symbolic.

American light crude (West Texas Intermediate, WTI), took 2.08% to 88.68 dollars after the long Labor Day weekend.

(Written by Marc Angrand)

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