by Claude Chendjou
PARIS (Reuters) – A rebound is expected on Wall Street on Monday at the open and European stocks are also moving in the green at mid-session, the appetite for risk being back after the worst week since the beginning of the year in stock indices amid fears of a prolonged rise in interest rates. New York index futures point to a Wall Street open up 0.44% for the Dow Jones, 0.53% for the Standard & Poor’s 500 and 0.64% for the Nasdaq. In Paris, the CAC 40 advances by 1.69% to 7,308.9 points around 12:20 GMT. In Frankfurt, the Dax takes 1.58% and in London, the FTSE advances by 0.76%.
The pan-European FTSEurofirst 300 index rose by 1.21%, the EuroStoxx 50 for the euro zone by 1.93% and the Stoxx 600 by 1.24%.
Fears about interest rates are fueled by macro-economic indicators which show the economy’s resilience despite the desire of central banks to curb demand, in order to curb inflation deemed to be still high.
In the United States, the PCE price index, the inflation measure favored by the United States Federal Reserve (Fed), even showed a surprise acceleration in January, according to data published on Friday, which led the money markets to expect now on a federal funds terminal rate of around 5.4% by July from 5.2% previously.
Some economists, like NatWest Bank’s Kevin Cummins, predict that rate will even peak at 5.75% and that a 50 basis point Fed rate hike in March is now on the table, so that the rise was so far expected at only 25 points next month.
In the eurozone, Christine Lagarde, President of the European Central Bank (ECB) repeated in an interview with The Economic Times that a 50-point rate hike by the central bank was to be expected in March and that it would do whatever it takes to bring inflation back to its 2% target in a sustainable way.
Despite these warnings, investors seem for the moment to favor cheap purchases in the European sectors of energy (+1.46%), basic resources (+1.26%), new technologies ( +1.96%) and automotive (+1.57%), which are among the biggest increases of the day.
These sectors, sensitive to changes in interest rates, lost between 1.4% and 3.8% last week.
VALUES IN EUROPE
In individual stocks, Worldline (+3.65%), Michelin (+3.12%) and Renault (+3.08%) are in the top three of the Parisian CAC 40.
In Frankfurt, the second German bank Commerzbank stands out with a gain of 4.69% for its return to the Dax index, replacing the industrial gas group Linde.
In London, AB Foods, owner of Primark, advances by 1.13% thanks to the increase in its annual forecasts, while in Stockholm, Hennes & Mauritz wins 3.59%, allowing the index to distribution to increase by 2.01%.
In notable declines, Dutch group PostNL fell 7.81% after a profit forecast for this year fell below market expectations.
WALL STREET VALUES TO FOLLOW
RATES The rise in the equity markets is not reflected in an easing on the bond market: the ten-year Bund yield is up 3.6 basis points, at 2.56%, and that of two years by 4. 4 points, at 3.06%.
In the United States, yields for these two maturities are also up, respectively at 3.95% and 4.83% (+3 points).
EXCHANGES At the mid-session of the stock markets in Europe, the dollar fell by 0.15% against a basket of reference currencies after having come close to a seven-week high on Monday in the prospect of a continuation of the rise in interest rates in the States. -United. At least six Fed officials are due to speak this week.
At the same time, the euro appears at 1.0565 dollars, up 0.18%, after falling to 1.053 dollars on Monday, its lowest level since January 6.
The Japanese currency is trading at up to 136.55 yen for one dollar after the words of the probable future governor of the Bank of Japan, Kazuo Ueda, in support of the ultra-accommodating policy led by the institution.
The oil market is volatile on Monday after Russia decided on Saturday to suspend its crude oil exports to Poland, the country having delivered its first Leopard tanks to Ukraine the day before. However, the strength of the dollar and fears of a recession are weighing on oil prices.
Around 12:20 GMT, Brent fell 0.3% to 82.91 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.17% to 76.19 dollars.
NO MORE MAJOR ECONOMIC INDICATOR ON TODAY’S AGENDA
(Written by Claude Chendjou, edited by Matthieu Protard)
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I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.