by Claude Chendjou

(Reuters) – The main European stock markets, except London, are expected to be slightly higher at the open on Monday but the trend should be cautious before the statements on Tuesday and Wednesday by the chairman of the United States Federal Reserve and the publication of the report at the end of the week. monthly on employment in the United States which should provide new elements on the evolution of the economy and the future trajectory of interest rates.

Futures contracts on indices suggest an increase of 0.32% for the CAC 40 in Paris, 0.14% for the Dax in Frankfurt and 0.28% for the EuroStoxx 50. The FTSE 100 in London should contrast ebb 0.06%.

Main meeting of the week, investors await Friday the publication of the report on employment in the United States for the month of February and a possible revision of the January statistics which had been clearly higher than expected, raising fears of a tightening monetary extended.

The Reuters consensus predicts 200,000 job creations for February after 517,000 in January, an unemployment rate stable at 3.4% and average hourly wages up 0.3% over one month, as in January, but at a slower pace. more sustained over one year (+4.7% against +4.4%).

Ahead of that, US Federal Reserve Chairman Jerome Powell is due to speak to Congress Tuesday and Wednesday on the central bank’s monetary policy, while San Francisco Fed Chair Mary Daly reiterated on Saturday. that if the labor market remained tight and inflation high, interest rates would have to rise further and remain high for a long time.

Monetary policy meetings of banks in Japan, Canada and Australia are also scheduled for the week.

The day’s session will be marked by data on retail sales in January in the euro zone where a recovery is expected at a monthly rate of 1.0% after the contraction of 2.7% the previous month.

AT WALL STREET

The New York Stock Exchange ended the week on a bullish note on Friday as falling U.S. Treasury yields and the dollar restored investors’ appetite for risk despite the ever-present prospect of an interest rate hike of the Fed longer than expected.

The Dow Jones Industrial Average gained 1.17%, or 387.4 points, to 33,390.97 points.

The broader S&P-500 gained 64.29 points, or 1.61%, to 4,045.64 points.

The Nasdaq Composite soared for its part by 226.02 points (1.97%) to 11,689.01 points.

Investors were encouraged by the release of data on service sector activity in the United States, which slowed slightly in February but remained stronger than expected, with new orders and employment at their highest since a year, suggesting continued economic growth in the first quarter.

IN ASIA

At the Tokyo Stock Exchange, the Nikkei index ended on a gain of 1.11% to 28,237.78 points and the Topix, broader, advanced 0.84% ​​to 2,036.49 points.

In China, the Shanghai SSE Composite lost 0.19% and the CSI 300 lost 0.52%.

At the opening of the plenary session of parliament, China on Sunday set a modest economic growth target of around 5% this year, a figure lower than the 6% expected by the market, after a rise of only 3%. in 2022.

CHANGES

The dollar fell 0.22% on Monday against a basket of benchmark currencies.

The Japanese currency is trading at 135.59 yen to the dollar after hitting a three-month low against the greenback last week. The yen is under pressure as Haruhiko Kuroda will chair his last meeting of the Bank of Japan (BoJ) on Friday before the handover to Kazuo Ueda, chosen by the government as future governor of the central bank.

The euro, up 0.12%, rose to 1.0647 dollars.

RATE

Yields on ten-year US Treasuries and fell about three basis points to 3.93% and 4.85% respectively.

In Europe, yields on the German Bund for these two maturities are respectively 2.65%, down nearly seven basis points, and 3.18%, down about 2.5 points. The German 10-year posted its biggest weekly gain since Dec. 23 last week, gaining nearly 19 basis points as the market expects the ECB’s deposit rate to peak 4% by December.

OIL

The oil market is affected by China’s growth forecasts and a certain caution ahead of Jerome Powell’s hearings.

Brent fell 0.79% to $85.15 a barrel, as did US light crude (West Texas Intermediate, WTI) at $79.09.

(Written by Claude Chendjou, edited by Bertrand Boucey and Matthieu Protard)

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