by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected to rise on Monday at the opening after closing in the red on Friday amid concerns about interest rates, but the rebound in sight could be weakened by geopolitical tensions and new comments from central bankers.

Futures contracts on indices suggest an increase of 0.42% for the CAC 40 in Paris, 0.43% for the Dax in Frankfurt, 0.41% for the FTSE 100 in London and 0.40% for the EuroStoxx 50.

The CAC 40 recorded a weekly gain of 3.05% last week and the Stoxx 600 an increase of 1.40% on the back of strong corporate results which partly took precedence in Europe on macroeconomic fears linked to the latest US indicators showing the persistence of inflationary pressures and the dynamism of the labor market.

The week which opens will be marked by a new series of publications in Europe with this Monday Forvia, Tuesday Capgemini and Engie, Wednesday Danone and Eiffage, Thursday Axa, Bouygues and Deutsche Telekom, and Friday Bayer and BASF.

In the United States, three-quarters of the companies in the S&P-500 have already published, but investors will closely follow the accounts of Walmart and Home Depot on Tuesday and those of Nvidia on Wednesday.

Apart from the publication on Wednesday of the minutes of the last meeting of the American Federal Reserve (Fed) and on Friday that of the PCE inflation index in the United States, the macroeconomic agenda for the week is practically empty.

Questions about the rate trajectory, however, could continue to fuel concerns as Goldman Sachs and Bank of America Global Research are now betting on three new Fed rate hikes of a quarter point this year instead of two. At least five Fed officials are also due to speak during the week.

In the Eurozone, the peak of the European Central Bank (ECB) deposit rate is now valued around 3.75%, which suggests an additional increase of 125 basis points compared to the current level.

Geopolitical tensions could also weigh on the trend, with North Korea firing two ballistic missiles off its eastern coast on Monday, while US Secretary of State Antony Blinken warned his Chinese counterpart Wang Yi against consequences of Beijing’s support for Moscow.

AT WALL STREET

The New York Stock Exchange ended in disarray on Friday, as investors worried that the Fed would continue its restrictive monetary policy.

The Dow Jones Industrial Average gained 0.39%, or 129.84 points, to 33,826.69 points.

The broader S&P-500 lost 11.32 points, or 0.28%, to 4,079.09 points.

The Nasdaq Composite fell for its part by 68.56 points (-0.58%) to 11,787.27 points.

In stocks, Microsoft, Nvidia and Amazon fell, weighing on the S&P 500, as the yield on 10-year Treasury bills hit a three-month high.

Moderna fell after announcing that its experimental messenger RNA flu vaccine had not been shown in a study to be at least as effective as an existing vaccine against a strain of the disease.

IN ASIA

At the Tokyo Stock Exchange, the Nikkei index ended Monday on a gain of 0.07% to 27,531.94 points and the Topix, broader, advanced 0.39% to 1,999.71 points.

In China, the Shanghai SSE Composite gained 1.78% and the CSI 300 gained 2.09%.

China has, as expected, decided to keep its main rates unchanged for the sixth consecutive month, as the world’s second-largest economy shows more signs of recovery from the crisis linked to the COVID-19 pandemic.

The preferential loan rate LPR (Loan prime rate), an interest rate over one year, thus remains at 3.65%, while that at five years is unchanged at 4.30%.

VALUES TO FOLLOW IN EUROPE:

RATE

The yield on ten-year US Treasury bills appeared Monday at 3.81% after rising Friday in session to 3.929%, the highest in three months.

CHANGES

The dollar fell victim to profit taking and fell 0.08% against a basket of benchmark currencies on Monday after hitting a six-week high last week.

The Japanese currency, trades at 134.06 yen to the dollar, at a two-month low, as traders nervously await whether or not Kazuo Ueda will be confirmed as Bank of Japan governor on Friday. BoJ).

The euro is trading at $1.0688 after falling to $1.0613 on Friday, a six-week low.

OIL

Oil prices, which fell around 4% last week amid concerns over demand, are trying to rebound on Monday: Brent gained 0.8% to $83.66 a barrel and US light crude (West Texas Intermediate , WTI) 0.69% to $76.87.

(Written by Claude Chendjou, edited by Kate Entringer)

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