EUROPE EXPECTED DOWN
PARIS (Archyde.com) – The main European stock markets are expected to fall on Monday at the opening while the dollar moves to its highest in five weeks, the debate on the rise in interest rates in the United States, the risk of recession in Europe and the economic difficulties in China continue to focus the attention of investors.
Index futures suggest a decline of 0.49% for the CAC 40 in Paris, 0.44% for the Dax in Frankfurt, 0.25% for the FTSE 100 in London and 0.4% for the EuroStoxx 50.
The latter dropped 1.23% last week while the CAC 40 lost 0.89% following a series of six consecutive weeks of increases.
The week ahead will be dominated by US Federal Reserve Chairman Jerome Powell’s intervention at the Jackson Hole symposium on Friday, which will give him the opportunity to clarify his positions on the timing and pace of rate hikes. interest rate less than a month before the next monetary policy meeting.
From the statements of other Fed officials last week, the markets mainly retained the need to continue raising rates, the first signs of a deceleration in prices still seeming too weak to justify a change of course.
“Fed stakeholders have stressed that further rate hikes are coming as the fight once morest inflation is not yet won,” summarizes Rodrigo Catril, senior currency strategist at National Australia Bank, in a note.
Markets and economists surveyed by Archyde.com in recent days continue to favor the hypothesis of a rate hike of 50 basis points in September, but the possibility of a rise of 75 points is far from being ruled out.
In China, on the contrary, it is the fall in rates that is making the news: the People’s Bank of China (PBC) has indeed lowered its prime lending rates at one and five years, a new credit support measure following those decided last week in the face of persistent difficulties in the real estate sector and the resurgence of the COVID-19 epidemic.
While awaiting Jerome Powell’s speech, investors will study the first results of the S&P Global PMI surveys on Tuesday and the minutes of the July meeting of the European Central Bank (ECB) on Thursday.
VALUES TO FOLLOW:
A WALL STREET
The New York Stock Exchange ended lower on Friday, dragged down by falling US large-cap stocks and rising US bond yields, ending four straight weeks of gains.
The Dow Jones index fell 0.86%, or 292.3 points, to 33,706.74, the Standard & Poor’s 500 lost 55.37 points, or 1.29%, to 4,228.37 and the Nasdaq Composite fell from 260.13 points (-2.01%) to 12,705.22.
Amazon (-2.86%) Apple (-1.51%) and Microsoft (-1.39%) were the main contributors to the S&P 500 decline.
Over the whole week, the latter fell by 1.21%, following four weekly increases in a row. The Dow Jones lost 0.16% over the week, the Nasdaq 2.62%.
Index futures so far suggest a decline of around 0.5%.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index ended the session down 0.47%, as major technology stocks lost ground in the wake of Wall Street amid rising bond yields: Tokyo Electron lost 1, 97%, Fanuc 1.93% and Shin-Etsu Chemical 1.07%.
In China, the Shanghai SSE Composite rose by 0.49% and the CSI 300 by 0.65% following the new rate cut by the BPC.
CHANGES
The dollar hit its highest level since July 15 once morest other major currencies before paring its gains (+0.06%).
Beyond speculation on American rates, the greenback is benefiting from the recurring difficulties of the euro: at 1.0032 dollars, the latter moved closer to parity following Russia’s announcement on Friday of the closure of the Nord Stream 1 gas pipeline from August 31 to September 2, which is likely to increase the risk of shortages in Europe.
The Chinese yuan, for its part, fell to its lowest level in almost two years following the BPC’s rate cut.
RATE
The rally in US bond yields triggered on Friday by producer price figures in Germany is barely easing: the ten-year, which gained almost 10 basis points in the last session of the week, briefly exceeded 3% for the first time since July 21 before returning to 2.974% and the two-year is displayed at 3.2635%.
On the European market, the ten-year German, which took nearly 15 points on Friday, fell only very slightly in the first trade, to 1.213%.
OIL
The oil market fell once more following three sessions of increases in a row, the fear of seeing the rise in US rates weigh on demand having regained the upper hand.
Brent fell 1.77% to 95.01 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.38% to 89.52 dollars.
NO MAJOR ECONOMIC INDICATOR ON THE AGENDA FOR AUGUST 22
(Written by Marc Angrand, edited by Matthieu Protard and Kate Entringer)
