MARCHES-SYNTH-SE-3: Stocks retreat, Powell disappoints, yields worry
by Laetitia Volga
PARIS (Reuters) – Major European stock markets fell on Friday, as disappointing statements from the Chairman of the Federal Reserve (Fed) rekindled investor concerns over inflation fears reflected by rising bond yields.
In Paris, the CAC 40 index lost 0.85% to 5,781.12 points around 09:05 GMT. In Frankfurt, the Dax gives up 0.72% and in London, the FTSE gives up 0.83%.
The EuroStoxx 50 index of the euro zone drops 0.75%, the FTSEurofirst 300 drops 0.7% and the Stoxx 600 is down 0.59%.
US stocks fell sharply on Thursday as the Nasdaq even moved into corrective territory, after statements by Jerome Powell, who disappointed some investors by failing to indicate that the Fed could step up its bond purchases to counter rising yields bond.
Although he has once again clearly stated that the institution will maintain its accommodative monetary policy and that the increase in prices should only be temporary, the market remains worried about the surge in bond yields which could herald borrowing costs. higher and thus slow down the fragile economic recovery.
“Jerome Powell failed to reassure as the markets waited for concrete measures from the Fed to control or at least slow down the rate hike, synonymous with strong fears about future inflation. Widespread price hike beyond 2% will not hold, ”Saxo Bank said in a note.
The market took note of industrial orders in Germany which rose 1.4% in January, twice as much as analysts expected on average, as buoyant export demand more than made up for it. the weakness of the internal market.
But it is above all the publication of the monthly employment report of the US Department of Labor that will mark the meeting, at 13:30 GMT. Economists polled by Reuters expect 182,000 job openings after the low figure of 49,000 given for January.
“Good numbers on the job market could temporarily make investors forget concerns about the bond market and induce a renewed appetite for risk on the stock market. Add to this the prospect of an upcoming vote on the plan. Joe Biden’s relaunch by the Senate and everything suggests that the world stock markets could go even higher in the short term, “said Christopher Dembik at Berenberg.
All sectors are down in early trade. Energy (-0.11%) posted the smallest decline, helped by the increase in oil prices. The Stoxx transport and leisure index fell 1.87%.
In Paris, Faurecia sells 1.23% and, at the top of the CAC 40, Stellantis takes 1.11%, the latter having announced the conditional distribution to its shareholders of its stake in the automotive supplier.
Dassault Aviation loses 2.85% after posting lower 2020 results
Video: Wall Street ends sharply, revived by vaccines and support plan (AFP)
Click here to enlarge
A WALL STREET
The Dow Jones index fell 1.11% to 30,924.14, the larger S & P-500 lost 1.34% to 3,768.47 and the Nasdaq Composite fell 2.11% to 12,723.47 points .
Since its February 12 close at 14,095.47, the Nasdaq has lost more than 10%, entering market correction territory.
Apple (-1.58%), Tesla (-4.86%) and PayPal (-6.27%) are among the stocks that have weighed the most on the S & P-500 as tech companies are particularly sensitive to the increase in mandatory returns.
The US session is shaping up to be volatile judging by the index futures yo-yo. A time given to equilibrium then down 0.7%, they now indicate a decline of 0.3% the opening.
The Nikkei in Tokyo ended down 0.23%, held back by the continued rise in US bond yields and Jerome Powell’s wait-and-see remarks.
In China, the CSI 300 index fell 0.34% after Prime Minister Li Keqiang announced a cautious annual growth target of at least 6%.
“The very low GDP growth target is equivalent to no target at all because the consensus was 8% and my forecast was 7%,” said Iris Pang, chief economist at ING.
Chinese markets, however, reduced their losses on the performance of technology stocks following Beijing’s announcement of a 7% annual increase for five years in research and development spending.
After taking eight basis points on Thursday and in the morning in Asia reached its highest level since February 25 at 1.583%, the yield on ten-year Treasuries is trying to stabilize at around 1.555%.
Its German counterpart took two basis points to -0.287% and the yield of the OAT of the same maturity peaked for one week at -0.026% before falling back to -0.0334%, up three points.
In the forex market, the greenback is moving to a three-month high against a basket of benchmark currencies after climbing 0.75% on Thursday as yields rose.
As for the euro, it lost 0.26% against the greenback, at 1.193 dollars.
Oil prices amplify yesterday’s gains and move to 14-month highs after OPEC + agreed to maintain most of its production cut in April – giving Russia and Kazakhstan a small exception – by due to the fragile recovery in demand.
A barrel of Brent gained 1.62% to 67.82 dollars and US light crude rose 1.41% to 64.73 dollars.
(edited by Patrick Vignal)