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MARKET REVIEW. Rising bond interest rates weighed on stock markets on Tuesday, while oil prices were at their highest since 2014.
The European places had been anchored in the red since the opening. The New York Stock Exchange, which was closed on Monday due to a holiday, should also open down.
Stock market indices at 8:12 a.m.
In the United States, futures contracts Dow Jones fell by 273.00 points (-0.76%) to 35,523.00 points. The futures contracts S&P 500 fell 42.75 points (-0.92%) to 4,612.00 points. The futures contracts Nasdaq decreased by 228.75 points (-1.47%) to 15,367.00 points.
In Europe, results were down. In London, the FTSE 100 dropped 39.52 points (-0.52%) to 7,571.71 points. In Paris, the CAC 40 lost 55.49 points (-0.77%) to 7,146.15 points. In Frankfurt, the DAX fell 154.46 points (-0.97%) to 15,779.26 points.
In Asia, the Nikkei Tokyo lost 76.27 points (-0.27%) to 28,257.25 points. For his part, the Hang Seng Hong Kong fell 105.25 points (-0.43%) to 24,112.78 points.
On the oil side, the price per barrel of American WTI advanced US$1.28 (+1.53%) to US$85.10. The barrel of Brent de la mer du Nord rose US$1.33 (+1.55%) to US$87.39.
The context
In the UK, the jobless rate fell to 4.1% for the three months to the end of November.
Both Brent and WTI barrel prices hit their highest levels in more than seven years on Tuesday, boosted by supply disruptions, heightened geopolitical tensions and a pick-up in demand.
“Supply difficulties in some major oil-producing countries, such as Angola, Nigeria and Libya, combined with exceptionally high natural gas prices, continue to put pressure on crude prices”, adds Ipek Ozkardeskaya, analyst at Swissquote.
As for the health situation, the Omicron variant proves to be less serious for oil demand than its predecessors and does not slow down the rise in prices.
Many analysts now expect crude prices to rise above US$90 a barrel, or even the US$100 mark, which still seemed impossible to envisage a few months ago.
This rise in crude oil prices “fuels inflation fears and makes a further acceleration of the US Federal Reserve’s monetary policy change likely,” said Jürgen Molnar, analyst at RoboMarkets.
The announcements that the institution has made on an upcoming monetary tightening are pushing up interest rates on the bond market.
Yields on US debt are at their highest since the start of the pandemic: at 1.81% for the 10-year maturity and 1.01% for the two-year. Germany’s borrowing rate is approaching zero for the first time since 2019.
A rise in bond rates generally penalizes equities, because it improves the profitability of bonds, assets considered less risky by investors.
On the other hand, the Bank of Japan maintained its ultra-accommodative monetary policy, despite raising its inflation forecast for 2022-2023.
“With Tokyo’s monetary policy decisions, the monetary policy patchwork in 2022 will be even more colorful,” which can disrupt markets, according to CMC Markets analyst Jochen Stanzl.
Oil stocks benefited from the upward trend in oil prices. In London, Shell took 1.97% and BP 1.32%. In Paris, TotalEnergies rose by 1.60%.
Sales of new cars in Europe marked a new record low in 2021, held back by the health crisis and shortages of electronic chips.
The values of the sector recovered after an early session in the red. In Paris, Renault lost 0.18%, just like Stellantis. In Frankfurt, Volkswagen dropped 0.42% and Continental 2.04%, more Daimler took 0.15%.
The world’s leading heavyweight Daimler Trucks (-1.96% to 34.74 euros) for its part increased its sales by 20% in volume in 2021.
The European currency was down 0.18% at US$1.138 around 7:40 a.m. Quebec time.
the bitcoin was flat (-0.06%) at US$41,710.
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