Market: Rise in sight on Wall Street, improvement in Europe, China fuels optimism
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by Claude Chendjou

PARIS (Reuters) – Wall Street is expected to rise on Tuesday at the opening and the European stock markets evolve in the green at mid-session, the announcement of the reopening of the borders of China despite an explosion of cases of contamination by the virus SARS-CoV-2 rekindling the return to risky assets.

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New York index futures signal Wall Street open up 0.63% for the Dow Jones, 0.52% for the Standard & Poor’s 500 and 0.29% for the Nasdaq for the resumption of trading since the markets closed last Friday for the Christmas holidays.

In Paris, the CAC 40 advanced by 1% to 6,570.14 around 12:30 GMT. In Frankfurt, the Dax gains 0.68%. In London, the FTSE, closed since Friday after a shortened session, will not reopen until Wednesday.

The pan-European FTSEurofirst 300 index rose 0.4%, the eurozone’s EuroStoxx 50 0.61% and the Stoxx 600 0.44%.

China announced Monday evening that it would lift the mandatory quarantine from January 8, as part of the fight against the COVID-19 epidemic for anyone entering its territory, despite a mass of patients in hospitals.

The management of the disease has also been downgraded to category B, in the same way as anthrax or AIDS, a new step in the easing of health restrictions which is fueling optimism in the financial markets.

Especially since Beijing has announced a strengthening of its support for the catering and tourism sectors, hard hit by the epidemic.

WALL STREET VALUES TO FOLLOW

VALUES IN EUROPE The prospect of a broad reopening of the Chinese economy benefits cyclical sectors such as the automobile (+1.58%) and industry (+0.98%) but also the commodity compartment (+ 0.69%), energy (+1.05%) and luxury stocks.

In Paris, Kering advances by 2.24%, Hermès by 2.18% and LVMH by 2.71%.

Elsewhere in Europe, the Swiss Richemont takes 3.17% and the Italian groups Salvatore Ferragamo and Moncler respectively 1.52% and 3.08%.

CHANGES

Appetite for risky assets is weighing on the dollar, which is down 0.19% against a basket of benchmark currencies.

The euro took the opportunity to rise to 1.0648 dollars (+0.12%).

RATE

Bond yields are up, supported by the prospect of continued monetary tightening by central banks.

In the euro zone, Klaas Knot, a member of the Governing Council of the European Central Bank (ECB), said on Monday that the institution would continue to raise interest rates in the coming months, estimating inflation was still too high to slow down in the fight against rising prices.

The yield of the two-year German Bund touched 2.714% in session, the highest since 2008, while that of ten years took up 12 points, to 2.507%, close to its 2011 peak reached in October at 2.532 %.

OIL

Oil prices are supported by announcements from China and the unprecedented cold snap in the United States which is disrupting production.

Brent rose 0.6% to 84.42 dollars a barrel and American light crude (West Texas Intermediate, WTI) 0.55% to 80 dollars.

The two oil benchmarks have hit a session high since December 5.

(Written by Claude Chendjou, edited by Kate Entringer)

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