RISE IN VIEW IN EUROPE, REVITALIZED OPTIMISM ON UKRAINE
by Marc Angrand
PARIS (Archyde.com) – The main European stock markets are expected to rise on Monday, the hope placed in the negotiations between Russians and Ukrainians and the fall in oil supporting stocks despite the continued fighting, while the fixed income and currency markets prepare for the monetary policy meetings of the next few days in the United States, the United Kingdom and Japan.
Futures contracts on indices suggest an increase of 1.3% for the Dax in Frankfurt, 0.25% for the FTSE 100 in London and 1.12% for the EuroStoxx 50. As for the CAC 40 in Paris, it could take up to 1% according to the first indications available.
As deadly fighting continues on Ukrainian territory, Kiev and Moscow on Sunday reported positively on the progress of their discussions with a view to ending the armed conflict on Ukrainian territory and a new negotiation session between delegations from the two camps by videoconference must begin at 08:30 GMT.
The war in Ukraine remains the main factor influencing market sentiment, but investors are also positioning themselves for the US Federal Reserve meeting, which is expected to conclude on Wednesday with the first in a series of long-term rate hikes to to curb inflation at its highest in 40 years.
The Archyde.com consensus calls for a limited quarter-point rise in the federal funds rate target (“fed funds”), but some are counting on six more hikes by the end of the year.
In Europe, the Bank of England is expected to increase its key rate again on Thursday, already raised by a quarter of a point in December as in February.
In the euro zone, where the start of the rate hike will have to wait several more months, the time has come to try to measure the impact of the conflict in Ukraine: the Banque de France thus estimates that the conflict and its repercussions on prices raw materials could cut French growth by two points while boosting inflation.
A WALL STREET
The New York Stock Exchange ended in the red on Friday, dragged down by growth stocks and the technology sector in a context still weighed down by the conflict in Ukraine.
Wall Street opened higher on comments from Vladimir Putin citing positive developments in talks with Kiev, before turning lower.
At the close, the Dow Jones lost 0.69%, or 229.88 points, to 32,944.19, the Standard & Poor’s 500 55.21 points (-1.30%) to 4,204.31 and the Nasdaq Composite 286.15 points (-2.18%) to 12,843.81.
The decline in very large capitalization stocks such as Apple (-2.39%) or Tesla (-5.12%) weighed on the S&P 500 index, whose 11 sector indices ended down.
Over the week as a whole, the S&P 500 fell 2.88%, the Dow Jones 2.00% and the Nasdaq Composite 3.53%.
Index futures suggest a higher open for now.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index gained 0.58%, the hope of a recovery in tourism in Japan with the ebb of the epidemic of COVID-19 in the archipelago and the fall of the yen. being added to the general optimism on Ukraine and the impact of the drop in oil.
The trend is very different in China, where the Shanghai SSE Composite is down 1.84% and the CSI 300 is down 2.33%, with massive new restrictions related to COVID-19 and lower new bank lending in February weighing on the trend. . In Hong Kong, the Hang Seng fell 4.27%, as technology continued to suffer from fears of forced withdrawals by Chinese groups from the American stock market.
EXCHANGES/RATES
The dollar is virtually unchanged against the euro, which is trading slightly above 1.09, but continues to rise against the yen, against which it hit a five-year high of 117.87.
The Japanese currency continues to suffer from the prospect of a monetary status quo from the Bank of Japan, which meets at the end of the week.
In the bond market, US yields continue to rise before the Fed and with inflationary fears: that of two-year US Treasury bonds reached 1.809%, its highest level in two and a half years, and the ten-year rose at 2.06%, the highest since February 16.
OIL
The oil market continues to move away from its recent highs, held back by hopes placed in diplomacy on Ukraine and by anticipation of Fed decisions.
Brent fell 2.41% to 109.96 dollars a barrel and US light crude (West Texas Intermediate, WTI) 2.62% to 106.47 dollars.
Despite a decline of more than 4% last week, they still show a jump of almost 40% since the beginning of the year.