MARCHES-SUMMARY-1: Caution in sight in Europe with China, oil and rates are still rising
by Blandine Henault
PARIS (Reuters) – Major European stock markets are expected on a cautious note on Tuesday to open, amid concerns about China and continued rising oil prices and bond yields.
Futures contracts report a gain of 0.04% for the Parisian CAC 40 but a decline of 0.09% for the FTSE in London, 0.08% for the Dax in Frankfurt and 0.04% for the EuroStoxx50.
European indices took advantage of the results of the federal elections in Germany on Monday, which ruled out the prospect of the left-wing Die Linke party participating in a government coalition, a scenario that worried investors.
But reasons for concern persist beyond that, and particularly in China where power shortages are slowing production and could further disrupt supply chains.
The Evergrande file is also pending: the heavily indebted real estate developer has not paid the interest on a bond loan that he had to honor last Thursday and has 30 days to resolve the situation.
Another major test on the bond market is looming for Evergrande, which will have to pay interest this Wednesday in the amount of $ 47.5 million on a bond with a 9.5% coupon and maturing in March 2024 .
Without mentioning Evergrande, the People’s Bank of China said on Monday that it would “safeguard the legitimate rights of consumers in the real estate industry.”
In the United States, the bill providing for the raising of the debt ceiling of the United States and the financing of the federal administrations to avoid their paralysis (“shutdown”) was not adopted Monday by the Senate, very divided, where Republicans won enough votes to prevent a vote on the text.
The Democratic peers of US President Joe Biden, who have a narrow majority in both houses of Congress, now have only three days to avoid a “shutdown”, as current funding for federal services ends Thursday evening .
Faced with these concerns, the European stock markets could however still obtain support on the side of the oil market, where the barrel of Brent is now moving to more than 80 dollars.
The oil market continues to be driven by supply fears as demand tends to rebound with the recovery of the global economy. The prices of black gold post their sixth consecutive session of increase.
The barrel of Brent is trading at 80.6 dollars (+ 1.35%), the highest since October 2018. That of US light crude (WTI) gained 1.44% to 76.54 dollars, the highest since July 6.
RATES / CHANGES
The 10-year Treasuries yield continues its bullish momentum after the Federal Reserve’s announcements last week and gains more than five basis points to 1.5305%, its highest since the end of June.
In Europe, the yield of the German Bund follows the trend and gains more than three basis points, to -0.192%.
The dollar continued to benefit from the rise in US rates and gained another 0.15% against a basket of benchmark currencies.
The euro, which had managed to return to the threshold of 1.17 dollars earlier in the meeting, fell back to 1.1683.
A WALL STREET
The New York Stock Exchange ended in disarray on Monday, the Dow Jones having benefited from the craze for growth-linked stocks while the Nasdaq paid the price for clearings targeting technology stocks amid sharply rising bond yields Americans.
The Dow Jones index gained 0.21% to 34,869.37 points. The S & P-500 lost 0.28% to 4,443.11 points and the Nasdaq Composite fell 0.52% to 14,969.97 points.
Futures on US indexes signal a still loose opening on Tuesday, with a rise of 0.15% for the Dow Jones but a decline of 0.2% for the Nasdaq.
The Tokyo Stock Exchange fell 0.19% as caution prevailed before the ruling Liberal Democratic Party (PLD) vote on Wednesday to appoint its new leader and, de facto, the new prime minister .
In mainland China, the CSI 300 erased its gains after initially profiting from statements by the People’s Bank of China on safeguarding consumer interests.
The Hang Seng took 1.4%, helped by the rebound in the technology segment.
(edited by Jean-Stéphane Brosse)