Inflation fears set the trend again

PARIS (Reuters) – Wall Street is expected to drop and European stock markets are expected to drop in mid-session as the latest inflation data in Europe rekindles fears of an acceleration in monetary tightening. of the Chinese economy.

Futures in New York indices open 0.60% for the Dow Jones, 0.81% for the Standard & Poor’s 500 and 1.13% for the Nasdaq on Wall Street.

Paris fell 0.3% to 6,412.09 around 11:50 am CAC 40 GMT. Frankfurt, Dax lost 0.24% and London, FTSE 0.28%.

The pan-European FTSEurofirst 300 index fell 0.47%, EuroStoxx 50 for the euro area fell 0.39% and Stoxx 600 0.39%.

The momentum in the stock markets on Tuesday, thanks to the lifting of some health restrictions in China and reassuring economic indicators, turned into a fiasco after European inflation figures were announced on Wednesday.

The pan-European Stoxx 600, which was only positive in March for the whole month, drops further in May.

Even though price growth in the euro area remained stable at 7.4% for a year, the so-called core inflation, which excludes the more volatile energy and unprocessed food prices, shows an annual rate of 3.9% after 3.2. . 2% in March, nearly double the 2% target set by the European Central Bank (ECB), which should lead it to start raising its rates from July.

In the UK, where monetary tightening is already underway, inflation reached 9.0% annualized in April, a level not seen since official records began in the late 1980s.

On Tuesday, US Federal Reserve Chairman Jerome Powell said the central bank will raise interest rates as needed to curb inflation, even if it means curbing growth.

According to investors, continued high inflation could also have an impact on company results.

“Many companies have managed to pass the rising costs to customers and maintain strong margins, but concerns remain about consumers’ ability to sustain such a situation over time,” said Susannah Streeter, investment and market analyst at Hargreaves Landsdown.

FOLLOWING VALUES FROM WALL STREET

The move of major retail group Target slid 16.9% in premarket stocks after announcing a quarterly profit cut in half as prices rose and a warning about the risk of further deterioration in margins.

VALUES IN EUROPE

In Europe, the trend was also driven by the releases of corporate financial accounts such as stock market operator Euronext, which rose 4.88% after better-than-expected results and cost control.

British luxury brand Burberry is also sought after after its appearance is confirmed.

Bulk catering group Elior, on the other hand, posted a 2.2% return after lowering its annual forecasts related to inflation and the pandemic, which reduced their margins in the first half.

Dutch bank ABN Amro (-9.78%) was penalized for its quarterly results, while Commerzbank action gained 3.76% in response to a controversial article in the Financial Times earlier in the year for a possible merger with Italian bank UniCredit. .

Air France-KLM rose 5.9%, the French-Dutch airline announced a long-term partnership in air freight with shipping group CMA CGM, which could receive 9% of its capital.

Siemens Energy posted a gain of 2.38% after the news that the group has prepared an offer for a portion of Siemens Gamesa’s capital.

At the sectoral level in Europe, new technologies (-0.56%) showed the biggest declines, while defenses such as energy (+1.91%) and real estate (+0.93%) and community services (+0.48%) different from other parts.

In Paris, TotalEnergies, Engie and Veolia rose 0.4% from 1.6%, while Capgemini, STMicroelectronics and Worldline fell from 1.6% to 1.8%.

RATIO

In the bond market, the yield of the ten-year German Bund rose by three basis points to 1.082%, while the yield of the two-year bond, which is most sensitive to changes in interest rates, rose 5.2 points to 0.429%. 0.444% hit the highest level since November 2011.

Dutch central bank governor Klaas Knot spoke on Tuesday about the possibility of a half-point increase in the European Central Bank’s (ECB) deposit rate in July. UBS analyst Rohan Khanna noted that this is the first time an ECB official has mentioned a 50 basis point hike because money markets now expect rates to rise 110 basis points. .

Yields on ten-year Treasury bills score 3.1 points, 3,0007%, which is still supported by the latest statements from US Federal Reserve Chairman Jerome Powell.

CHANGES

The dollar gained 0.22% against other major currencies after its biggest drop in a session in more than two months.

The euro is trading at $1.0505, down 0.4%, the release of the single European currency inflation figures did not react to the crowd.

Sterling hit $1,2501, its best session since late 2020, after rising 1.4 percent on Tuesday, returning to $1,2402 after inflation figures.

PTOROLE

Oil prices are bolstered by the lifting of some health restrictions in China that should boost demand for crude oil.

Brent rose 1.27% to $113.38 a barrel, while American light crude oil (West Texas Intermediate, WTI) rose 1.7% to $114.3 a barrel.

MAY 18 AGENDA NO ECONOMIC INDICATORS

(Some data may show slight drift)

(Edited by Claude Chendjou, by Jean-Michel Blot)

by Claude Chendjou

Leave a Comment