Fall in stocks in sight pending inflation in the United States – 04/12/2022 at 07:40


MAJOR EUROPEAN STOCK EXCHANGES ARE EXPECTED TO DECLINE

by Laetitia Volga

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

The first indications available point to a fall of 0.93% for the CAC 40 in Paris, 1.15% for the Dax in Frankfurt, 0.74% for the FTSE in London and 1.01% for the EuroStoxx. fifty.

The issue of inflation is fundamental now that the publication of the monthly figures for consumer prices in the United States (12:30 GMT) is approaching, whose additional acceleration could confirm the Federal Reserve in the scenario of a more pronounced monetary tightening of the expected.

The Reuters consensus sees US consumer prices rising 8.4% year-on-year in March, marking the index’s biggest rise since January 1982.

“We are quite aggressive in terms of US rate hikes and we believe that it is not just the extent of monetary tightening but its pace that will affect investors,” Elizabeth Tian, ​​director of bond management at Citigroup, told Reuters. in Sydney.

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

A WALL STREET

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

The Dow Jones Industrial Average 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 0.4% drop at the open.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei fell 1.87% to a four-week low as technology stocks, the index heavyweights, tumbled after the negative session on Wall Street.

Resona Asset Management Chief Strategist Koichi Kurose noted that concerns over China’s COVID-19 lockdown and rising commodity prices were also weighing on the trend.

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

VELOCITY

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

CHANGES

The variations are limited in the foreign exchange market where the dollar gains 0.09% against a basket of reference currencies for its ninth consecutive session of increases under the effect of expectations of rate hikes by the Fed.

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

PETROLEUM

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 not be able to compensate for the loss of Russian crude.

Brent gained 1.66% to $100.11 a barrel and US light crude (West Texas Intermediate, WTI) rose 1.79% to $95.98.

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

(Laetitia Volga, edited by Bertrand Boucey)

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