Rebound in sight in Europe after three sessions in the red

Rebound in sight in Europe after three sessions in the red

View of the Palais Brogniard, former Paris Stock Exchange

View of the Palais Brogniard, former Paris Stock Exchange

by Claude Chendjou

PARIS (Reuters) – Major European stocks are expected to rise at the open on Tuesday after three straight sessions in the red and a low since December 2020 for the pan-European Stoxx 600 index, but factors behind the stock slump, such as the rapid increase in interest rates, the increased risk of a recession and the turmoil in the foreign exchange market are far from over.

Index futures suggest a rise of 0.48% for the Paris CAC 40, 0.89% for the Frankfurt Dax, 0.51% for the London FTSE 100 and 0.87% for the EuroStoxx fifty.

“I think everyone felt like we were riding a tidal wave of information last week after one of the most incredible macro weeks in recent memory,” wrote Jim Reid, a strategist at Deutsche Bank.

In a sign that investor nervousness has not completely subsided, the index that measures volatility in the United States is still at a three-month high of 32 points, while its European equivalent ended Monday above 30. points.

In currencies, sterling fell to $1.0327 on Monday in the session, its lowest level since the UK’s transition to the decimal system in the early 1970s, and returned to $1.08035 on Tuesday. The Bank of England (BoE) said it was watching financial markets very closely, adding that it would not hesitate to raise interest rates if necessary.

In Japan, where authorities intervened in the foreign exchange market last week to support the yen against the dollar, since then the central bank and political leaders have multiplied new warnings of “speculative movements” on currencies.

The dollar caught its breath on Tuesday, shedding 0.29% against a basket of benchmark currencies, after hitting its highest level since May 2002 on Monday.

In the euro zone, where the euro fell to a new 20-year low on Monday at $0.9569, the single currency rose to $0.965 (+0.46%) on Tuesday.

Christine Lagarde, president of the European Central Bank, said on Monday that the ECB was not in the business of correcting mistakes in domestic policy. She is still due to speak this Tuesday at 11:30 GMT during a debate organized by the Banque de France.

ON WALL STREET

The New York Stock Exchange closed lower again on Monday as analysts said investors had “thrown in the towel” after the US Federal Reserve’s rate hike.

The Dow Jones Industrial Average, which fell in a bear market, fell 1.11%, or 329.6 points, to 29,260.81 points.

The broader S&P-500 lost 38.19 points, or 1.03%, to 3,655.04 points, the lowest level since mid-June.

The Nasdaq Composite fell 65 points (-0.60%) to 10,802.92 points.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index ended up 0.56% at 26,579.19 points and the broader Topix rose 0.47% to 1,873.01 points.

In China, the Shanghai SSE Composite gained 0.79% and the CSI 300 gained 0.8% as stock markets headed for a rally after back-to-back sessions in the red.

The positive trend is driven by tourism values ​​in the run-up to China’s National Day scheduled for October 1 and thanks to the easing of health restrictions in Hong Kong and Macau.

Chinese stock regulators have also asked some fund managers and brokers to refrain from massive stock sales ahead of the Communist Party congress scheduled for Oct. 16 to avoid wild swings in the market, two sources said.

SPEED

In Asian markets, 10-year and 2-year Treasury yields were flat on Tuesday, trading at 3.8698% and 4.3015%, respectively. The former jumped in Monday’s session by more than 20 points to 3.933%, a 12-year high.

Short-term bond yields in Europe continue to rise: the two-year German Bund, which hit a high since December 2008 at 2.031% on Monday before paring its gains to 1.943%, is listed at 1.977 on Tuesday. %. The ten-year rate hit its highest Monday session since December 2011, at 2,132%.

OIL

Oil prices, which fell to a nine-month low on Monday due to a stronger dollar and fears about global demand, rebounded somewhat on Tuesday.

Brent rose 1% to $84.90 a barrel and US light crude (West Texas Intermediate, WTI) advanced 1.11% to $77.56.

(Written by Claude Chendjou, edited by Jean-Stéphane Brosse and Kate Entringer)

#Rebound #sight #Europe #sessions #red

Leave a Comment

Your email address will not be published. Required fields are marked *