Fall in equities in sight while waiting for inflation in the United States – 04/12/2022 at 07:40

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MAJOR EUROPEAN STOCK EXCHANGES EXPECTED TO FALL

by Laetitia Volga

PARIS (Reuters) – Major European stock markets are expected to fall on Tuesday at the open and government bond yields continue to climb on fears of runaway inflation that could lead to further monetary tightening. scale in the United States.

The first indications available indicate a drop of 0.93% for the Paris CAC 40, 1.15% for the Dax in Frankfurt, 0.74% for the FTSE in London and 1.01% for the EuroStoxx 50 .

The theme of inflation is essential as the publication of monthly consumer price figures in the United States approaches (12:30 GMT), a further acceleration of which could confirm the Federal Reserve in the scenario of more monetary tightening. pronounced than expected.

The Reuters consensus expects consumer prices in the United States to rise 8.4% year on year in March, which would represent the largest increase in the index since January 1982.

“We’re pretty hawkish in terms of US rate hikes and we think it’s not just the extent of monetary tightening but its pace that’s going to impact investors,” Elizabeth Tian told Reuters. head of bond management at Citigroup in Sydney.

“Equity markets have been very strong…but we expect the Fed meeting in May to result in an announcement on tapering monetary easing and that’s when- where we might see volatility emerge in equities,” she added.

AT WALL STREET

The New York Stock Exchange ended lower on Monday as the continued rise in bond yields weighed on major growth stocks.

The Dow Jones index fell 1.19% to 34,308.08 points, the S&P-500 lost 1.68% to 4,412.83 points, and the Nasdaq Composite fell 2.18% to 13,411.96 points. .

Futures currently suggest a decline of 0.4% at the open.

IN ASIA

At the Tokyo Stock Exchange, the Nikkei dropped 1.87% to a four-week low with the decline in technology stocks, heavyweights of the index, in the wake of the negative session on Wall Street.

Resona Asset Management chief strategist Koichi Kurose pointed out that concerns over China’s COVID-19 lockdown and rising commodity prices were also affecting the trend.

In China, the large cap CSI 300 and the Shanghai SSE index lost 0.48% and 0.76% respectively due to the country’s health situation where the number of new cases of contamination by the SARS-CoV coronavirus. -2 rose to 1,272 on Monday, 88 more cases than the previous day.

RATE

On the bond market, the yield on the ten-year US government bond rose by nearly four basis points to 2.8243% after hitting its highest level in session since December 2018 at 2.8360%.

CHANGES

Variations are limited on the foreign exchange market where the dollar gleans 0.09% against a basket of reference currencies for its ninth session of consecutive increases under the effect of expectations of a rate hike by the Fed.

The euro gave up some ground, around 1.0875 dollars, after being supported the day before by the results of the first round of the presidential election in France.

OIL

Oil prices rose, erasing some of the previous day’s losses, as the market weighed the possibility of sanctions against the Russian energy sector and OPEC warned that it would be unable to offset the loss of Russian crude.

Brent gained 1.66% to 100.11 dollars a barrel and American light crude (West Texas Intermediate, WTI) took 1.79% to 95.98 dollars.

On Monday, they both lost around 4% amid fears for demand with the health crisis in China.

(Laetitia Volga, edited by Bertrand Boucey)

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