Rising outlook for Europe, the dollar and yield retreat (updated) – 08/30/2022 at 08:35


DEFENDING EUROPE, THE DOLLAR AND DECREASING YIELDS

PARIS (Reuters) – Major eurozone stock markets are expected to rise on Tuesday as the dollar loses some ground and bond yields fall, with markets generally beginning to calm after of the shock caused by the last Statements of the Chairman of the US Federal Reserve.

Index futures suggest a rise of 0.44% for the CAC 40 in Paris, 0.27% for the Dax in Frankfurt and 0.34% for the EuroStoxx 50. In London, where markets remain closed on Monday for a public holiday , the FTSE 100 was shown down 0.2%.

Wall Street pared losses in late trading on Monday after a sharp decline triggered Friday by Fed Chairman Jerome Powell’s speech on the need for tighter monetary policy for “a while” against inflation.

In Europe, investors should also listen to statements by European Central Bank (ECB) officials who suggest that the ECB may raise rates by three quarters at some point next week, more than expected. until today.

If the rise in the cost of credit remains at the forefront of investors’ concerns, their attention will be focused on the shorter term in the monthly report on American jobs that will be published on Friday and should provide new elements of the evolution of the economy. in America.

In the near future, this Tuesday’s session will be animated, among other things, by the first estimate of inflation in Germany at 12:00 GMT, then the American consumer confidence index at 14:00 GMT.

ON WALL STREET

The New York Stock Exchange ended lower on Monday but above its session lows: the Dow Jones index fell 0.57%, or 184.41 points, to 32,098.99, the Standard & Poor’s 500 lost 27.05 points, or 0.67% , to 4,030.61 and the Nasdaq Composite fell 124.04 points (-1.02%) to 12,017.67.

The three indexes hit their lowest levels in a month during the day, under the influence of Jerome Powell’s statements on Friday.

The CBOE volatility index meanwhile hit its highest level in seven weeks.

In support of the trend, the energy compartment gained 1.54% thanks to the strong increase in the oil market, which was driven by the information about the possible reduction in production by OPEC + and the tensions in Libya. Exxon Mobil and Chevron gained 2.30% and 0.75% respectively.

Index futures so far suggest an open of 0.2% to 0.4%.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index ended up 1.14% thanks to a rebound in technology stocks such as Tokyo Electron (+1.65%).

In China, the trend reversed lower after new health restrictions announced in several cities in the face of rising cases of COVID-19: the SSE Composite in Shanghai yielded 0.44% and the CSI 300 0.33%.

“Despite the decline in the overall number of COVID cases, the COVID situation in China may worsen,” Nomura analysts said in a note. “Markets could be hit again in the coming weeks, which could lead to another round of downgrades (of growth forecasts) from economists.”

CHANGES

The dollar retreated against other major currencies (-0.09%) after a 20-year high recorded on Monday, a decline that can be explained, among other things, by the renewed interest from of forex traders in the euro driven by speculation on the size of the next rate hike by the European Central Bank (ECB).

The European currency rose to 0.9999 dollars (+0.04%) against 0.9912 at its lowest on Monday.

RATE

US Treasuries yields fell in Asian trade after strong gains in the last two sessions: the two-year return at 3.4089% after reaching the highest level since late 2007 at 3.489% and the ten years yielded three basis points at 3.0838%.

In the European market, the ten-year German also fell in early trade to 1.481% after a two-month peak of 1.515%.

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The oil market erased some of its gains on Monday, as the market now fears that future interest rate hikes in industrialized countries will eventually weigh on demand for crude oil.

Brent fell 0.49% to 104.58 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.03% to 96.98 dollars.

(Written by Marc Angrand)

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