#Sharp #fall #equities #yields #rise
EUROPEAN STOCK MARKETS FALL MID-SESSION
PARIS (Reuters) – Wall Street is expected to fall at the open and European stocks are expected to fall mid-session on Monday, while bond yields rise on concerns about inflation and the bank’s policy tightening. central.
Index futures show a drop of 1.67% for the Dow Jones, 2.11% for the Standard & Poor’s-500 and 2.69% for the Nasdaq. In Paris, the CAC 40 fell 2.12% to 6,125.57 at around 11:30 GMT. In Frankfurt, the Dax lost 1.78% and in London, the FTSE lost 1.92%.
The pan-European FTSEurofirst 300 index fell 2.04%, the euro zone’s EuroStoxx 50 fell 2.19% and the Stoxx 600 fell 2.11%.
The prospect of further interest rate hikes to fight inflation is weighing on global equity and bond markets, where sovereign yields have hit new highs.
In addition to the tightening of monetary conditions, the indirect effects of the war in Ukraine and the strengthening of an anti-COVID-19 policy in China reinforce fears of a sharp slowdown in the world economy.
The Sentix index of investor confidence in the euro zone is at its lowest level since June 2020, with -22.6 in May, falling for the third consecutive month as the impact of the crisis in Ukraine on the economy appears more and more clearly.
VALUES IN EUROPE
All major sectors in the European ranking are in the red, with basic resources (-4.11%) and high-tech (-3.65%) among the steepest declines.
The former is penalized by the 7% drop in the price of iron ore in China on demand concerns, while the latter is weakened by the level of bond yields.
In Paris, Atos lost 4.63% and ArcelorMittal 2.96%. In London, the mining groups Rio Tinto, Glencore and Anglo American yielded 4.73% to 5.63%.
Infineon fell 4.78% after the increase, according to Jefferies, “highly expected” in its annual turnover target.
VELOCITY
The ten-year US government bond yield gained nearly five basis points to 3.1746%, after a high since November 2018 at 3.203%.
Its German equivalent is also making progress, allowing it to record a peak since August 2014 at 1,189%.
Faced with runaway inflation, markets expect the European Central Bank to start raising rates this year.
Governing Council member Robert Holzmann believes it is appropriate for the ECB to make two or three rate hikes, he said in an interview published on Saturday.
Money markets are forecasting a rise of almost 95 basis points in the ECB’s deposit rate by the end of the year.
CHANGES
The dollar is on the rise, supported by recovering Treasury yields and fears related to COVID-19 in China. Against a basket of international currencies, it gained 0.17% and hit a nearly 20-year high in session.
The euro fell as much as 0.55% on the session to $1.0493 before stabilizing around $1.054. Sterling hit its lowest level in nearly two years against the dollar at 1.2258.
The land yuan fell to its lowest level since October 2020 after China’s trade figures confirmed market concerns about the impact of lockdowns on the economy: exports rose in April at their slowest pace since June 2020 (+3.9% year-on-year) while imports remained stable.
PETROLEUM
Oil prices are falling sharply, buoyed by a stronger dollar and demand concerns in China.
Brent fell 2.27% to $109.84 a barrel and US light crude (West Texas Intermediate, WTI) fell 2.46% to $107.07.