A new slowdown looms in Europe and on Wall Street - 01/19/2022 at 07:44

A new slowdown looms in Europe and on Wall Street – 01/19/2022 at 07:44

New slope on display in Europe

New slope on display in Europe

by Marc Angrand

PARIS (Reuters) – Major European stock markets are expected to continue lower on Wednesday in the wake of Wall Street and most Asian markets, as rising bond yields continue to favor tech-led sell-offs.

Index futures point to a decline of -0.45% for the Dax in Frankfurt, -0.51% for the FTSE 100 in London and -0.55% for the EuroStoxx 50. As for the CAC 40 in Paris, it could fall by about 0.5% according to indices. first available.

The CAC 40, like the European Stoxx 600, has seen a three-session decline over the past four sessions.

The general sentiment in the markets is still dominated by the development of US Treasury yields one week ahead of the US Federal Reserve’s decisions, which could represent an acceleration in its monetary policy tightening.

The yield on the two-year Treasury, most vulnerable to the impact of price expectations, continues to rise to 1.0592%, the highest level since February 2020, and the 10-year yield at 1.8718% continues to rise. approaching the 2% threshold.

The move is mainly based on the recent change in expectations about the Federal Reserve, which may indicate at least next week that it will start raising interest rates in March.

“You can’t rule anything out, but right now the Fed has the luxury of watching the markets narrow down on them, so they don’t need to do anything fancy in January,” Jim said. Vogel, price analyst at FHN Financial.

In addition to monetary policy concerns, there are persistently high oil prices, to their highest levels since 2014, and geopolitical tensions, particularly around Ukraine.

In this context, investors will closely follow the expected UK and German inflation figures before European markets open.

The session will then be animated by a series of results in Europe and the United States, including those from ASML, Bank of America, Morgan Stanley and Procter & Gamble.

The values ​​to be followed:

Wall Street

The New York Stock Exchange ended sharply lower on Tuesday, as financial stocks suffered less-than-expected results from Goldman Sachs while technology stocks suffered from higher bond yields.

The Dow Jones fell 1.51% or 543.34 points to 35368.47 points, the Standard & Poor’s 500 lost 85.74 points (-1.84%) to 4577.11 and the Nasdaq Composite Index fell 386.86 points (-2.60%) to 14506.90 points.

The Nasdaq is now down 9.7% from its closing high on November 19 and is therefore very close to its retracement territory, defined by a 10% drop, for the first time since the beginning of the month last year. It also finished below the 200-day moving average, an important technical threshold, for the first time since April 2020.

Goldman Sachs fell 6.97% after posting quarterly earnings below expectations. In the aftermath, the S&P Financials Index lost 2.3%.

Futures contracts on major indices are pointing to a continuation of the decline at the open.

In Asia

On the Tokyo Stock Exchange, the Nikkei lost 2.8%, dragged down by a decline in Wall Street, a 12.79% drop in Sony after Microsoft announced its acquisition of Activision Blizzard and 4.97% of Toyota after it was abandoned. of its annual production forecast.

In China, the Shanghai SSE Composite lost 0.62% and the CSI 300 Index lost 1.01%. The session was marked, among other things, by profit taking in the electric vehicle and healthcare sectors.

the changes

The dollar lost a few fractions against the other major currencies (-0.07%) but held most of its gains on Tuesday, supported by higher bond yields.

The euro is trading below $1.1330 after falling 0.7% on Tuesday, its biggest drop in one session in a month.

The pound also fell against the dollar ahead of British inflation figures and against the backdrop of questioning the authority of Boris Johnson as head of the British government.

oil

Oil prices are rising for the fourth session in a row and reaching their highest levels in seven years, after the closure of a pipeline linking Iraq with Turkey after an explosion of unknown origin added to the already long list of factors that may restrict global supplies.

Brent rose 1.33 percent to $88.67 a barrel, and US light crude (West Texas Intermediate, West Texas Intermediate) 1.44 percent to $86.66. Both reached their highest level since October 2014.

(Written by Mark Angrand, with Karen Brittel in New York)

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