NET FALL IN EUROPE TO START A RISK WEEK
by Marc Angrand
PARIS (Reuters) – Major stock markets in the eurozone are expected to fall sharply on Monday after Wall Street plummeted on Friday and two days before the US Federal Reserve’s decision, in a context still characterized by tightening monetary policy, slowing global growth, inflation and the war in Ukraine.
Futures on the indices indicate a fall of -1.12% for the Dax in Frankfurt and -1.28% for the EuroStoxx 50 while the CAC 40 in Paris could yield around 1.2% according to the first available directions.
UK markets will not reopen until Tuesday, a UK holiday. Markets in China, India and several Southeast Asian countries are also closed.
Major European stocks closed higher on Friday for a third straight session before Wall Street recorded its worst performance in almost two years after a series of lower-than-expected results in the key high-tech industry and the announcement of further acceleration of the PCE inflation index. the largest viewership by the Federal Reserve.
The weekend’s economic news is also not encouraging at all: official Chinese PMIs released on Saturday showed deteriorating activity in both manufacturing and services in April as a result of health restrictions. Huge measures that Beijing decided to try to reduce the COVID-19 epidemic.
The Fed could raise its key interest rate by half a point on Wednesday and will have to clarify its intentions to cut its balance sheet. In general, the tone of the speech of its president, Jerome Powell, could affect the development of markets in the short term.
“Investors are now expecting interest rates to rise by 50 basis points (bps) in Wednesday’s session and … 75 bps in June, which would be the first since 1994,” said John Plassard of Mirabaud Securities.
The Bank of England meets for its part on Thursday and is expected to continue the upward trend of interest rates that are already in progress in view of the acceleration of the rise in prices.
In the meantime, the next meeting will be marked by the publication of the final PMIs of manufacturing in the euro area and the US manufacturing ISM.
ON THE WALL STREET
US stock markets had their worst session since 2020 on Friday, as worrying inflation figures peaked at the top of disappointing news from Amazon, one of Wall Street’s biggest capitalizations.
The Dow Jones industrial average fell 2.77%, or 939.18 points, to 32,977.21 points, the Standard & Poor’s 500 lost 155.71 points (-3.63%) to 4,131.79 and the Nasdaq Composite scored dive 536.4.26 points, to 536.4119 points (-3.83%) (-3.83 points)
Thus, the S&P 500 recorded its biggest drop in a period since June 2020, the Nasdaq since September 2020.
Amazon fell 14.05% and Apple fell 3.66% the day after their quarterly results were released.
April closed with a 13% drop for the Nasdaq, its worst monthly performance since the 2008 financial crisis.
Index futures so far suggest a recovery of about 0.5% for the Dow and the S&P 500 and 0.7% for the Nasdaq.
On the Tokyo Stock Exchange, the Nikkei index gained 0.25% and the broader Topix 0.15% less than an hour after closing, as attention narrowed the spreads before the three-day closing of the “Japanese Golden Week”, which will prevent Japanese investors from reacting warmly to the events of the coming days.
Technology is suffering from the sharp fall of the Nasdaq on Friday, as the Tokyo Electron fell 0.67%, Advantest (-3.89%) or Fanuc (-1.83%).
EXCHANGES / INVOICES
The dollar rose again against other major currencies (+ 0.50%) after gains on Friday for the last session of April, which ended with a rise of 4.7%, its best monthly performance since January 2015.
The euro fell (-0.25%) but remains above $ 1.05 for the time being.
The oil market is shrinking due to declining trade in the absence of many Asian investors, worries about slowing growth in China, the world’s largest importer, which again offsets the risk of a European Union embargo on Russian crude.
Brent fell 1.1% to $ 105.96 a barrel and US West Texas Intermediate (WTI) fell 1.01% to $.
(Written by Marc Angrand)