FEARS FOR THE ECONOMY SHOULD HIND STOCKS
by Laetitia Volga
PARIS (Archyde.com) – The main European stock markets are expected to be in the red on Monday at the opening, concerns linked to global growth with expectations of monetary tightening and the epidemic of COVID-19 in China outweighing the victory without Emmanuel Macron’s surprise in the French presidential election.
The first available indications give a drop of 0.9% for the Parisian CAC 40, 1.45% for the Dax in Frankfurt, 1.3% for the FTSE in London and 1.49% for the EuroStoxx 50 .
The European Stoxx 600 index ended last week on a weekly decline of 1.42%, its biggest drop since the beginning of March, the last statements of the chairman of the American Federal Reserve (Fed), open to a rate hike. half a point, having reinforced the prospect of tougher monetary tightening in the United States to counter galloping inflation.
As for the European Central Bank (ECB), the idea of a first rate hike this summer seems to be gaining ground. According to nine sources, the institution’s officials are ready to end its asset purchase program as soon as possible and to raise its interest rates as early as July.
Without going so far as to mention a rate hike this summer, ECB President Christine Lagarde said on Friday that a hike before the end of the year was very likely.
“Rate and recession fears are now the biggest risks for investors… Soaring food and fuel prices, plus the end of major stimulus programs, have investors worried. low-income consumers’ ability to spend,” with a particular focus on demand, said Candace Browning, head of research at Bank of America.
In France, Emmanuel Macron was re-elected President of the Republic on Sunday by winning with 58.55% of the vote against the far-right candidate Marine Le Pen, after a second round marked by strong abstention. .
“For the markets, this is probably only a modest relief because the latest opinion polls had already hinted at his victory. The worst-case scenario has been spared us,” commented Holger Schmieding, chief economist at Berenberg.
A WALL STREET
The New York Stock Exchange ended sharply lower on Friday, weighed down by disappointing corporate publications and the decline in growth stocks with the prospect of a rapid rise in interest rates.
The Dow Jones index fell 2.82% to 33,811.4 points, the S&P-500 lost 2.77% to 4,271.78 points and the Nasdaq Composite fell 2.55% to 12,839.29 points.
The prospect of a more aggressive Fed weighed in particular on technology and growth stocks whose valuations are more vulnerable to rising sovereign yields.
Microsoft, Amazon, Apple and Alphabet fell from 2.41% to 4.15%.
Gap plunged 18.05%, Verizon 5.64% and HCA 21.8% after forecasts deemed disappointing.
Futures are pointing to an opening down about 0.5%.
IN ASIA
The Nikkei in Tokyo fell 1.84% on global concerns over Fed monetary policy.
In China, the CSI 300 drops 2.4%, the lowest since June 2020, and the SSE Composite index loses 2.63%, the concern about the economic damage of the containment in Shanghai and the timidity of the stimulus measures taken so far denting market sentiment.
Authorities in Beijing, which have identified 47 locally transmitted cases of COVID-19 since Friday, ordered residents of an area of the capital’s largest district on Monday not to leave the area for non-essential reasons, TV reports. of state.
EXCHANGES/RATES
The dollar gained 0.12% against a basket of benchmark currencies, taking advantage of its safe haven status with uncertainties about economic growth.
The euro fell slightly to 1.0773, after gaining 0.44% at the start of the session with the victory of Emmanuel Macron.
The ten-year Treasuries yield lost nearly four basis points to 2.8776%.
OIL
Oil prices fall amid lingering concerns over the possibility of a longer lockdown in Shanghai and a rate hike in the United States, both of which could hurt global economic growth and demand .
Some analysts have said the worsening war in Ukraine could increase pressure on the European Union to impose sanctions on Russian oil.
Brent lost 2.76% to 103.71 dollars a barrel and American light crude (West Texas Intermediate, WTI) dropped 2.81% to 99.2 dollars.
(edited by Bertrand Boucey)