Stocks Out of Order as Yields Rise – 04/11/2022 at 14:02


EUROPEAN STOCK EXCHANGES EVOLVED IN DISORDER MID-SESSION

by Laetitia Volga

PARIS (Reuters) – Wall Street is expected to be in the red and European stock markets are in disarray mid-session on Monday after a record high in benchmark government bond yields sent investors off course. technology stocks but benefit banks.

Index futures suggest a drop of 0.06% for the Dow Jones, 0.42% for the Standard & Poor’s and 0.81% for the Nasdaq.

In Paris, the CAC 40, heavily weighted by bank stocks, was up 0.72% at 6,595.3 at 11:18 GMT. In Frankfurt, the Dax lost 0.45% and in London, the FTSE lost 0.3%.

The pan-European FTSEurofirst 300 index lost 0.21%, the euro zone’s EuroStoxx 50 was broadly unchanged and the Stoxx 600 fell 0.38%.

The general context of the market continues to be dominated by the same concerns of recent weeks, from the war in Ukraine to the risk of an economic slowdown, through the tightening of monetary policies by the main central banks and the health situation in China .

The European Central Bank (ECB) will meet with its Governing Council on Thursday and should continue to lay the groundwork for a hike in key rates; Faced with record inflation in the euro zone, money markets are expecting a 70 basis point hike in total for December.

The monthly US consumer price figures for March, due on Tuesday, are the other big event of the week for the markets.

Investors are also bracing for quarterly corporate results with, in particular, the turnover of luxury giants LVMH and Hermès, but also the accounts of major US banks, whose profits are expected to fall by around 35% compared with last year, according to Refinitiv. IBES.

SURVEY-The Fed will quickly tighten policy in the coming months

VELOCITY

Expectations of a quick normalization of monetary policies continue to support bond yields, with 10-year Treasuries up four basis points at 2.7553% after a more than three-year high at 2.7840% .

In Europe, the yield on German 10-year paper gained more than seven basis points to 0.792% after hitting a high of 0.798%, the highest since February 2018. Its French equivalent hit its highest level since July 2015. at 1.309% before falling back to 1.286%.

The yield spread between the French 10-year bond and the Bund of the same maturity narrowed to 50.1 basis points following the results of the first round of the presidential election in France, which clearly gave the head of the incumbent, Emmanuel Macron. WALL STREET VALUES TO FOLLOW

Growth stocks like Meta Platforms and Microsoft are down more than 1% at the forefront.

VALUES IN EUROPE

The European high-tech sector index (-1.3%) also suffered from rising bond yields, unlike the banking sector, which rose 1.11%.

In Paris, Crédit Agricole and BNP Paribas take 2.18% and 3.35% respectively.

Societe Generale rose 6.79%, the biggest rise in the Stoxx 600, after announcing its withdrawal from Russia by selling its stake in Rosbank and its insurance subsidiaries to Interros Capital.

On the downside, tire maker Nokian Tires fell 12.36% after saying new EU sanctions against Russia will have a big impact on its production.

CHANGES

After seven sessions on the rise, the ‘dollar index’, which measures the variations of the greenback against a basket of reference currencies, is stable.

The euro, at $1.0904, was up 0.26% as traders welcomed Emmanuel Macron’s gain in the first round of French presidential elections with relief.

For its part, the pound sterling briefly lost ground against the dollar in reaction to the sharper-than-expected slowdown in British economic growth in February, to 0.1%, after 0.8% in January and compared to 0. 3% expected.

PETROLEUM

After two straight weeks of declines, oil prices continue to slide as International Energy Agency countries tap into their strategic crude reserves and rising COVID-19 cases in China.

The barrel of Brent fell 3.07% to 99.62 dollars and that of light American crude (West Texas Intermediate, WTI) 3.55% to 94.77 dollars.

(Laetitia Volga, editing by Marc Angrand)

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