#fall #sight #Europe #disappointing #Chinese #indicators
MAJOR EUROPEAN STOCK EXCHANGES ARE EXPECTED TO DECLINE
PARIS (Reuters) – Major European stock markets are expected to fall on Monday after lower-than-expected Chinese economic indicators were released, underscoring the impact of recent weeks’ lockdowns on the world’s second-largest economy.
Index futures suggest a drop of 0.43% for the Paris CAC 40, 0.36% for the Frankfurt Dax, 0.49% for the London FTSE 100 and 0.46% for the EuroStoxx fifty.
In China, retail sales fell 11.1% in April from the same month last year, almost twice as expected, and industrial production fell 2.9% – its biggest drop since February 2020 -, while that the Reuters consensus placed it slightly above. As for the official unemployment rate, it reached 6.1% after 5.8% in April.
These figures are obviously explained by the scope of the health restrictions imposed by the authorities to try to stop the resumption of the COVID-19 epidemic, measures that are beginning to relax with, in Shanghai, a complete lack of confidence planned here for June 1st.
But they fuel doubts about Beijing’s ability to meet its growth target of around 5.5% of gross domestic product (GDP) throughout the year.
These questions are in addition to those regarding the ability of the US economy to withstand the impact of the rapid increase in interest rates initiated by the Federal Reserve without too much damage.
Goldman Sachs has also revised down its growth forecast for the United States, to 2.4% for this year and 1.6% for the next.
“Our index of financial conditions fell by more than 100 basis points, suggesting a drag on GDP growth of around one percentage point,” said Jan Hatzius, an economist at Goldman Sachs.
“We expect the recent tightening in financial conditions to persist, in part because we believe the Fed will act as markets predict.”
They anticipate rate hikes of 50 basis points in the next two Fed meetings according to the CME FedWatch barometer, but the possibility of larger hikes is not yet ruled out.
The week ahead will be driven, among other things, by US retail sales and industrial production figures on Tuesday, as well as public interventions by Federal Reserve officials.
The New York Stock Exchange closed higher on Friday as relief from signs that suggested inflation may have peaked outweighed fears that the Federal Reserve’s policy tightening could drag the economy down. to a recession.
The Dow Jones index gained 1.47%, or 466.36 points, to 32,196.66, the Standard & Poor’s 500 gained 93.81 points (+2.39%) to 4,023.89 and the Nasdaq Composite advanced 434.04 points (+3.82%) to 11,805.00.
The rally of large-cap companies in the high-tech sector led the session, with Microsoft taking 2.26%, Apple 3.19%.
Despite these gains, the S&P 500 and Nasdaq posted their sixth week of declines, their longest stretch of losses since fall 2012 for the S&P 500 and spring 2011 for the Nasdaq.
Major index futures suggest a 0.4% to 0.7% lower open for now.
On the Tokyo Stock Exchange, the Nikkei index ended 0.45% higher after sharply reducing its gains in reaction to Chinese indicators for the day; rose 1.55% at the beginning of the session, taking advantage of the boost given by the Nasdaq.
In China, the Shanghai SSE Composite lost 0.42% and the CSI 300 lost 0.81%.
The dollar falters against other major currencies, but remains close to the 20-year high reached on Friday in the session.
The euro hovers around $1.04 after falling to $1.0354 on Friday, its lowest level since early 2017.
On the crypto side, bitcoin remains above $30,000, after falling to $21,400 on Thursday, the lowest level since December 2020.
In the government bond market, the US 10-year yield fluctuates around 2.9%. It had risen sharply on Friday after the announcement of unexpected stability in import prices in the United States last month.
Its German equivalent is virtually unchanged in early trading at 0.943%.
The oil market suffers from profit taking after rising almost 4% on Friday, although the risk of supply tensions in the event of a European embargo on Russian crude limits the fall.
Brent fell 1.72% to $109.63 a barrel and US light crude (West Texas Intermediate, WTI) fell 1.45% to $108.89.
The latter reached its highest level since March 28 at $111.71 at the beginning of the day.
(Written by Marc Angrand, with Wayne Cole in Sydney)