2023-06-26 18:23:13
(Photo: The Canadian Press)
MARKET REVIEWS. Global stocks moved lower on Monday, due to profit taking after a largely positive week and in the absence of US investors on the holiday.
Stock market indices at 7:45 a.m.
Wall Street was heading for a lower open, according to futures for all three major indexes.
The European stock markets evolve in dispersed order: Paris gained 0.22% while Frankfurt loose 0.15% and that London is at equilibrium (+0.01).
The context
The only indicator expected on Monday was the IFO barometer of business sentiment in Germany in June which continued to fall as recession takes hold in Europe’s biggest economy amid falling consumption and struggling industry manufacturing.
The indicator fell 3.2 points to 88.5 points, down for the second consecutive month, significantly lower than expected by Factset analysts, who had expected an IFO at 90.8 points.
Central banks continue to weigh on the markets. US Federal Reserve (Fed) Chairman Jerome Powell warned last week that further rate hikes were to be expected this year to try to contain inflation, while several central banks in Europe surprised markets with monetary tightening.
In addition, the European Central Bank (ECB) is holding its annual forum on the theme of economic stability in the face of high inflation until June 28, in Sintra, Portugal. The statements of the heads of the main central banks will again be watched by investors.
“Global activity seems to be slowing down more markedly as summer approaches, as the rebound in activity in services is running out of steam and the economic situation outside the United States is deteriorating markedly”, observes Xavier Chapard, member of La Banque Postale AM’s research and strategy team.
This economic slowdown is taking place when “the yield curves are the most inverted for forty years”, adds the analyst, explaining that long-term interest rates are becoming lower than short-term interest rates.
“The inversion of yield curves is one of the best leading indicators of recession,” he continues.
In the bond market, the yield on 10-year US government bonds stood at 3.68%, against 3.73% at Friday’s close, and the 2-year rate at 4.70%, against 4.74 %. In Europe, the interest on the German 10-year loan stood at 2.29% against 2.35%.
Moreover, this weekend’s Wagner episode “will probably remain largely ignored by investors, unless there are new developments that could change the course of the war in Ukraine”, estimates Ipek Ozkardeskaya, analyst from Swissquote.
Wagner’s chief, Yevgeny Prigojine, 62, went into open rebellion against the Russian command on Friday evening, before finally turning around.
Aston Martin signs deal with Saudi-American Lucid
The British luxury car manufacturer Aston Martin announced on Monday “a strategic supply agreement” with U.S.-Saudi electric vehicle maker Lucid to create “ultra-luxury, high-performance electric vehicles,” according to a statement.
The announcement made the title of Aston Martin soar, which climbed 9.50% on the London Stock Exchange.
Rise in oil, euro and bitcoin
Oil prices were up slightly, the gains caused by the mutiny of the paramilitary group Wagner in Russia remaining tempered by a sluggish economic context, unfavorable to global demand.
The barrel of North Sea Brentfor August delivery, was up 0.59% to US$74.29.
Its American equivalent, the barrel of West Texas Intermediate (WTI) for same month delivery, gained 0.49% to US$69.50.
The euro climbed 0.10% to US$1.0905.
The bitcoin fell 0.20% to US$30,320.
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