by Laetitia Volga

PARIS (Reuters) – The major European stock markets are expected in scattered order at the opening on Monday while crude prices soar after an OPEC + production cut, an unexpected decision which should benefit oil stocks but could also have an adverse impact on inflation.

The first indications available give an increase of 0.05% for the CAC 40 in Paris, 0.07% for the FTSE in London but a decline of 0.18% for the Dax in Frankfurt and 0.09% for the Euro Stoxx 50.

Oil prices climb more than 5% after Saudi Arabia and other OPEC+ member countries announced on Sunday further production cuts, for a total volume of around 1.16 million barrels per year. day, a surprise decision intended according to them to maintain the stability of the oil market.

After the recent good news on the US inflation front, which benefited equities at the end of last week, investors are now worried that this initiative will increase inflationary pressures and therefore push central banks to maintain a restrictive policy for longer. provided that.

“If oil continues to soar (…) the Federal Reserve and the European Central Bank will be immediately aware of what this entails. (…) As long as the banking crisis can be kept out of the way, this new risk to the inflation outlook may well cause the Fed to raise rates an additional 100 to 150 basis points this year,” said Clifford Bennett, chief economist at ACY Securities.

“After last week’s gains, it may be time to reconsider long positions in equities,” he added.

Many analysts’ expectations for a Fed rate hike have been revised upwards, with the likelihood of a quarter-point hike in May estimated at 56% from 48% on Friday.

OIL

Brent crude gained 4.78% to $83.71 a barrel and US light crude 4.86% to $79.35.

In response to OPEC+ announcements, Goldman Sachs now expects the price of Brent to reach $95 by the end of the year and $100 by the end of 2024.

VALUES TO FOLLOW:

AT WALL STREET

The New York Stock Exchange rose more than 1% on Friday and the Nasdaq index recorded its strongest quarterly gain since June 2020, as signs of slowing US inflation boosted hopes of an easing in the Fed’s monetary policy.

The Dow Jones index gained 1.26% to 33,274.15 points, the S&P-500 gained 1.44% to 4,109.31 points, its highest level since February 15, and the Nasdaq Composite advanced 1 .74% to 12,221.91 points.

Shares of big tech companies rose as investors turned away from banks and bond yields fell.

Apple rose 1.56% after winning an appeal in a legal battle against the UK Competition Authority over an investigation into its mobile browser and online gaming services.

IN ASIA

In the wake of Wall Street, the Nikkei in Tokyo gained 0.55%.

In China, the trend is driven by the rise in real estate values ​​after a survey by the firm China Index Academy showed that the prices of new houses in 100 cities of the country rose in March at the fastest pace in nine months thanks to the Beijing’s measures in favor of demand.

The Shanghai SSE Composite index gained 0.55% and the CSI 300 of the main capitalizations of mainland China 0.8%.

RATES/EXCHANGES

Yields on US government bonds are rising with the increased likelihood of a rise in the fed funds rate target in a month: the two-year takes five basis points to 4.1082% while the ten-year takes three points to 3.5166%.

The dollar gained 0.51% against other major currencies.

The euro is thus back below 1.08 dollars (-0.44%).

MAIN ECONOMIC INDICATORS ON THE AGENDA OF THE DAY

COUNTRY GMT INDICATOR PERIOD PREVIOUS CONSENSUS

FR 07:50 S&P manufacturing PMI March 47.7 47.7*

Overall

DE 07:55 S&P Manufacturing PMI March 44.4 44.4*

Overall

EZ 08:00 S&P Manufacturing PMI March 47.1 47.1*

Overall

UK 08:30 S&P March manufacturing PMI 48.0 48.0*

Overall

USA 2:00 p.m. ISM manufacturing index March 47.5 47.7

* first estimate

(Edited by Blandine Hénault)

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