Former building of the Paris Stock Exchange
by Laetitia Volga
PARIS (Archyde.com) – The main European stock markets are expected to be slightly lower on Monday at the opening, as investors worry regarding the economic fallout from the resumption of the COVID-19 epidemic in China.
Futures contracts show a decline of 0.34% for the CAC 40 in Paris and for the Dax in Frankfurt, 0.21% for the FTSE in London and 0.33% for the EuroStoxx 50.
Several major Chinese cities have recorded a further increase in COVID-19 cases, leading local authorities to introduce new health restrictions, particularly in Beijing where residents of the most populated district are not allowed to leave their homes.
Over the weekend, three people died of the disease in the capital while China had not recorded a death since the end of May.
This information is undermining hopes for a rapid easing of the government’s anti-COVID strategy and fueling fears of a global recession.
On that front, Wednesday’s release of the minutes of the Federal Reserve’s latest meeting may shed additional light on the level to which officials plan to raise interest rates.
Futures markets currently estimate an 80% chance of a 50 basis point hike in the federal funds rate (“fed funds”) in December and a peak around 5.0-5.25% in July.
In terms of economic indicators, producer prices in Germany recorded an unexpected drop in October, by 4.2% compared to September.
VALUES TO FOLLOW:
A WALL STREET
The New York Stock Exchange ended higher on Friday, as the rise in defensive stocks helped offset the fall in the energy sector, while investors ignored statements deemed rather restrictive by Fed officials Susan Collins and James Bullard on the continued rise in interest rates.
The Dow Jones index gained 0.59% to 33,745.69 points, the S&P-500 gained 0.48% to 3,965.34 points and the Nasdaq Composite ended stable (+0.01%) at 11,146, 06 dots.
Futures are currently signaling a decline of around 0.3%.
IN ASIA
The Nikkei gained 0.16% but the Tokyo Stock Exchange’s flagship index remained below 28,000 points as the increase in COVID-19 cases in China forced investors to be cautious.
In China, the CSI 300 index lost 0.9% and the Shanghai SSE Composite 0.4%. In Hong Kong, the Hang Seng fell 1.99%.
EXCHANGES/RATES
On the currency side, the trend is favorable to the dollar, which is up 0.53% once morest a basket of benchmark currencies.
The euro retreated to 1.0263 dollar, the single currency moving to its lowest level for ten days.
Recession fears are pushing bond yields down: that of ten-year Treasuries lost nearly three basis points to 3.7951% and its German equivalent was at 2.008%.
OIL
The oil market is down, hurt by concerns regarding demand in China and the strength of the dollar.
Brent fell 0.84% to 86.88 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.85% to 79.4 dollars.
(Edited by Bertrand Boucey and Kate Entringer)