Europe awaits in scattered order after Powell and the rise in oil (updated) – 03/22/2022 at 10:07

MODERATE DECREASE EXPECTED IN EUROPE

MODERATE DECREASE EXPECTED IN EUROPE

by Laetitia Volga

PARIS (Reuters) – Stocks in Paris and Frankfurt are expected to decline moderately at the open on Tuesday after the Fed chairman’s more dovish tone, while London’s Footsie 100 could to fall again. take advantage of the rise in the price of oil with the rise in the price of crude oil.

Futures contracts suggest a lower opening of 0.2% for the Paris CAC 40, 0.08% for the Frankfurt Dax and 0.08% for the London FTSE.

Speaking to the National Association for Business Economics (NABE), Fed Chairman Jerome Powell said the Fed could implement larger-than-usual rate hikes if needed to counter a sustained acceleration in inflation.

These statements, made this Monday at the time of the European closure, could fuel the climate of uncertainty linked to the economic situation and Russia’s offensive in Ukraine.

The lack of progress in the peace negotiations between the two countries and the possibility of new Western sanctions against the Russian energy sector raise fears of rising inflation and a sharp slowdown in the economic recovery, or even a recession in Europe, Clifford said. Bennett, chief economist at ACY Securities.

“Europe is likely to enter a recession and, as energy and food prices remain high, the poorest will be disproportionately affected. An increase in interest rates will have no impact on this wave of inflation due to the war,” he said.

A WALL STREET

The New York Stock Exchange closed lower on Monday as its major indices extended their decline during the session following comments from the Federal Reserve chairman. [.NFR]

The Dow Jones Industrial Average fell 0.58% to 34,552.99 points, the S&P-500 lost 0.04% to 4,461.18 points and the Nasdaq Composite fell 0.40% to 13,838.46 points.

On the stock side, Boeing fell 3.6% after one of its 737-800 jets, operated by China Eastern Airlines, crashed in southern China, reportedly killing everyone on board. board.

Futures point to a slightly lower session.

IN ASIA

The Tokyo Stock Exchange gains 1.48%, driven by the progress of the values ​​of the energy and financial sectors thanks, respectively, to the rise in the price of oil and the yield of bonds.

In China, the CSI300 large-cap index lost 0.08% while Hong Kong’s Hang Seng gained 2.22%, supported by Alibaba (+9.79%) which increased its share buyback program to 25,000 million dollars, a record amount for the e-commerce giant. .

CHANGES

The dollar appreciates after Jerome Powell’s comments that opened the door to a more aggressive monetary policy by the US central bank.

The dollar gained 0.46% against a basket of major currencies and 0.82% against the yen, which hit a six-year low of 120.46 per dollar.

“The growing monetary policy divergence between the Fed and the Bank of Japan (BoJ) amplifies the yen’s undervaluation against the dollar,” said MUFG analyst Lee Hardman.

The euro lost 0.42% to $1.0968.

QUALIFY

Like the dollar, US bond yields are rising, with 10-year bond yields reaching their highest level since May 2019, at 2.3460%, before stabilizing at 2.3224%.

Goldman Sachs expects the Fed to raise interest rates by 50 basis points at its May and June meetings following Jerome Powell’s remarks.

In Europe, the 10-year Bund yield gained three basis points to 0.477% in early trading.

PETROLEUM

Oil is on the rise as member countries of the European Union are divided over the establishment of sanctions against Russian oil.

“The proposed embargo is still far from materializing, as a significant number of EU countries oppose it. However, his speech on it is a significant change,” Commonwealth Bank of Australia analysts wrote in a note.

US light crude (West Texas Intermediate, WTI) gained 2.03% to $114.4 a barrel and Brent crude rose 2.47% to $118.48.

NO MAJOR ECONOMIC INDICATORS ON THE MARCH 22 AGENDA

(edited by Nicholas Delame)

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