Shares neglected, price rises, currency turmoil – 09/26/2022 at 15:01


The French flag above the Palais Brogniard, formerly the Paris Stock Exchange

by Claude Chendjou

PARIS (Reuters) – Wall Street is expected to fall on Monday and European stock markets traded in the red mid-session in a context of risk aversion still linked to rapidly rising interest rates and a accelerating the deterioration of the economy. situation, two things that are now added trouble to the foreign exchange market.

The future of the indexes in New York announced an opening on Wall Street below 0.69% for the Dow Jones, 0.74% for the Standard & Poor’s 500 and 0.59% for the Nasdaq.

In Paris, the CAC 40 lost 0.16% to 5,774.31 at around 12:20 GMT. In Frankfurt, the Dax fell 0.1% and in London, the FTSE fell 0.74%. The Milan Stock Exchange, on the other hand, took 0.49% the day after early legislative elections, which were won by the alliance of rights led by Giorgia Meloni.

The pan-European FTSEurofirst 300 index fell by 0.43%, the EuroStoxx 50 in the euro zone by 0.05% and the Stoxx 600 by 0.51%.

The pound sterling, which touched the session at 1.0327 dollars, the lowest level since the passage of the United Kingdom to the decimal system at the beginning of the 1970s, fueled speculations of a possible emergency intervention by the Bank of England ( BoE ).

“The market is now treating the UK as if it were an emerging market,” said Michael Every, strategist at Rabobank, who did not rule out BoE intervention.

In Japan, Finance Minister Shunichi Suzuki said on Monday that his country is ready to respond again to moves in currency speculation as Japanese authorities intervened last week in the foreign exchange market to support the yen against the dollar.

The euro, for its part, fell in the session to a low of 0.9569 dollars, a new low of twenty years against the American currency, while the dollar increased by 0.34% against a basket of reference currencies.

In addition to the turmoil in the exchanges, the forecasts highlighted by the OECD on Monday are a risk of recession in developed economies due in particular to the war led by Russia in Ukraine, inflation and the energy crisis.

In Germany, the monthly survey of the Ifo institute showed that the business climate in Germany decreased more than expected in September and that the risk of recession is more clear.

In addition, the public interventions expected from the heads of the major central banks hardly encourage risk taking, since they raised their interest rates last week, almost simultaneously, to prevent the high inflation.

VALUES IN EUROPE

In the pan-European Stoxx 600, the technology compartment (+1.27%) led the way, supported by cheap buying in stocks such as STMicroelectronics (+0.77%) and Dassault Systèmes (+0.56%).

On the other hand, the real estate sector (-2.4%) showed the strongest decline in the prospect of further interest rate increases that would reduce the borrowing capacity of consumers.

The commodity compartment, down 1.56%, and that of oil and gas, down 1.69%, suffered from the strength of the dollar and fears of reduced demand.

Oil companies TotalEnergies, BP and Shell lost 0.25%, 2.07% and 2.03% respectively.

Mining groups Anglo American, Glencore and Rio Tinto gained 2.92%, 1.58% and 1.09% respectively in London, while in Paris ArcelorMittal fell 0.26%.

RATE

Bond yields continued to rise: the ten-year German took more than seven points to 2.114% and the two-year more than 11 points to 2.017%.

In the United States, the ten-year and two-year Treasuries yields traded at 3.7808% and 4.2671%, an increase of about eight points respectively.

wool

Oil prices, which fell to a nine-month low, were punished by the continued appreciation of the dollar and fears of a slowdown in global demand.

Brent, which fell to a session low since January 14, fell 1.28% to 85.05 dollars per barrel.

American light crude oil (West Texas Intermediate, WTI), which fell to its lowest session since January 6, fell 1.24% to 77.76 dollars.

(Writing by Claude Chendjou, editing by Kate Entringer)

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