European stocks should attempt a rebound – 06/17/2022 at 08:41


EUROPEAN EQUITIES SHOULD TEST A REBOUND

PARIS (Reuters) – The main European stock markets are expected to rise on Friday after heavy losses caused the day before by the resurgence of recession fears in the United States and Europe but, despite this rebound, they are headed for one of their worst moments. . weekly performances in more than two years.

Index futures suggest a rise of 0.62% for the Paris CAC 40, 0.21% for the Frankfurt Dax, 0.16% for the London FTSE 100 and 0.41% for the EuroStoxx fifty.

The Paris index fell 2.39% on Thursday and finished below 5,900 points for the first time since March 2021, taking its drop to more than 20% from its closing high on January 5. It is currently down 4.87% for the week.

The broad European Stoxx 600 index ended Thursday at its lowest level since February 2021 after falling 4.49% in four sessions.

The rate hikes announced successively since Wednesday by the US Federal Reserve, the Bank of England and especially the Swiss National Bank (SNB) have put the risk of recession at the forefront of investors’ concerns, as which implies threats to the prospects of results. and the valuation of listed companies around the world.

The MSCI world index thus falls 5.7% since the beginning of the week, its worst performance since March 2020.

“We are entering a new phase of regime change, with risks to economic growth adding to the already tense inflationary backdrop,” said Vincent Mortier, chief investment officer at Amundi. “The ongoing pricing review is erasing most of the market’s overvaluation, but current levels are vulnerable to any deterioration in the company’s fundamentals.”

ON WALL STREET

The New York Stock Exchange closed sharply lower again on Thursday, also dragged down by recession fears: the Dow Jones index fell 2.42%, or 741.46 points, to 29,927.07, the Standard & Poor’s 500 lost 123.22 points (-3.25%) to 3,666.77 and the Nasdaq Composite fell 453.06 points (-4.08%) to 10,646.10.

The announcement of a stronger-than-expected drop in US housing starts and building permits only added to investor concerns following the Fed’s remarks.

The eleven main sector indices of the S&P-500 closed in the red, with the energy index falling 5.58% and the free consumption index 4.76%.

Futures so far suggest a 0.7% to 1% rally at the open.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index fell 1.77% and closed below 26,000 points for the first time since May 12. It fell 6.69% for the week as a whole, its worst weekly performance since April 2020.

In China, the Shanghai SSE Composite gained 0.6% and the CSI 300 1.04%, a trend that remains supported by hopes of further stimulus measures.

CHANGES/FEES

The dollar rallied 0.66% against other major currencies after falling 1.45% on Thursday in response to the Fed’s announcements and US indicators for the day.

The euro (-0.34%) thus returns to 1.0511 dollars after rising the day before to 1.0601.

The yen lost 1.33% against the dollar and 1.01% against the single European currency after the surprising status quo of the Bank of Japan.

In the bond market, the 10-year US Treasury yield at 3.2464% was broadly unchanged after falling almost ten basis points on Thursday. In Europe, the German 10-year bond fell as low as 1.683% in early trading, but French and Italian yields fell more sharply.

OIL

Fear of a deterioration in demand continues to weigh on the oil market, although the announcement by the United States of new sanctions against the Iranian petrochemical sector limits the fall.

Brent fell 0.32% to $119.43 a barrel and US light crude (West Texas Intermediate, WTI) fell 0.36% to $117.17.

At this point, Brent is headed for its first negative weekly return in five weeks and WTI its first in eight weeks.

(Written by Marc Angrand, with Tom Westbrook in Singapore)

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