FALLING YIELDS ALLOW EQUITIES TO REBOUND
by Marc Angrand
PARIS (Reuters) – Wall Street is expected to rise and European stocks, except for London, rose mid-session on Thursday, as falling bond yields allowed equities to recover even if the tightening of monetary policies and the war in Ukraine limit the potential for a stock market rebound.
Futures contracts on the main New York indices predict a gain of 0.09% for the Dow Jones, 0.26% for the Standard & Poor’s 500 and 0.48% for the Nasdaq.
In Paris, the CAC 40 gained 0.79% to 6,550.48 points at 10:50 GMT and in Frankfurt, the Dax advanced by 0.62% while in London, the FTSE 100 fell by 0.03%, penalized by the decline in energy and raw materials.
The EuroStoxx 50 index is up 0.79%, the FTSEurofirst 300 0.71% and the Stoxx 600 0.73%.
The latter lost 1.53% on Wednesday, its biggest one-session decline since March 10, and Wall Street then ended in the red after the publication of the minutes of the last meeting of the Federal Reserve, which confirms the the latter’s intention to raise rates and reduce its balance sheet at a sustained pace in the coming months.
Investors are now awaiting (at 11:30 GMT) the minutes of the European Central Bank’s (ECB) March meeting, hoping for further guidance on its rate hike and halt plans. asset purchases.
RATE
Yields on government bonds nevertheless started to fall again after the highest recorded in recent days, with some analysts judging that the content of the “minutes” of the Fed was already priced in.
That of ten-year US Treasury bonds fell more than two basis points to 2.5939% and the two-year fell more than six points to 2.4432%.
In Europe, the ten-year German returns to 0.645%. Its French equivalent fell more sharply, to 1.17%, after an uneventful auction of 11.5 billion euros in OATs, the maximum amount provided for by the Agence France Trésor (AFT).
At 52.3 points, the ten-year yield spread (“spread”) between French and German securities continues to ease after its marked rise at the start of the week, linked to the approach of the presidential election.
CHANGES
On the currency market, the dollar was practically unchanged against the other major currencies (+0.06%), very close to the high of almost two years reached a little earlier in the day.
The minutes of the Federal Reserve meeting “suggest that the Fed is pressing the brakes hard, which should be positive for the dollar”, summed up ING analysts in a note.
The euro is hovering around $1.09 awaiting ECB minutes, after falling to 1.0866, its lowest level since March 8.
WALL STREET VALUES TO FOLLOW
VALUES IN EUROPE
The beginning of a stock market rebound in Europe is benefiting defensive stocks, among other things: the Stoxx health index gained 1.6% and set a record, that of telecommunications took 0.95%, that of services to communities (“utilities “) 0.68%.
Commodities (-0.25%) and energy (-0.34%) suffered on the other hand from the strength of the dollar.
Shell (-1.17%) is also sanctioned after announcing that its exit from Russia would result in exceptional charges likely to reach five billion dollars, therefore much more than initially estimated.
In M&A news, Italian motorway and airport operator Atlantia jumped 7.98%. Global Infrastructure Partners (GIP) and Brookfield Infrastructure have announced that they have approached him and he could attract another offer according to several sources familiar with the matter.
OIL
Oil prices confirm their rebound after Wednesday’s fall, which took them to their lowest level in three weeks in response to the announcement by the International Energy Agency (IEA) of a massive use of its strategic reserves.
Brent gained 1.76% to 102.85 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.7% to 97.87 dollars.
(French version Marc Angrand)