European equities should attempt a rebound

EUROPEAN SHARES ARE EXPECTED TO TRY A REBOUND PARIS (Reuters) – The main European stock markets are expected to rise on Friday after the heavy losses caused the day before by the resurgence of fears of recession in the United States and Europe but despite this rebound, they are heading for one of their worst weekly performances in over two years. Index futures suggest a rise of 0.62% for the CAC 40 in Paris, 0.21% for the Dax in Frankfurt, 0.16% for the FTSE 100 in London and 0.41% for the EuroStoxx 50. The Paris index fell 2.39% on Thursday and ended below 5,900 points for the first time since March 2021, bringing its decline to more than 20% from its closing peak on January 5. It is currently down 4.87% over the week. The broad European Stoxx 600 index ended Thursday at its lowest 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 brought the risk of recession to the forefront of investors’ concerns, as it implies threats to the outlook. of results and the valuation of listed companies all over the world. The MSCI global index has thus fallen 5.7% since the start of the week, its worst performance since March 2020. “We are entering a new phase of regime change, with the risks to economic growth adding to the already tense inflationary environment,” said Vincent Mortier, Amundi’s Chief Investment Officer. “Ongoing repricing is wiping most overvaluations out of the market, but current levels are vulnerable to any deterioration in company fundamentals.” A WALL STREET The New York Stock Exchange ended down sharply again on Thursday, also carried away by fears of recession: 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 drop than expected in housing starts and building permits in the United States only added to the concerns of investors after the statements of the Fed. The eleven major sector indices of the S&P-500 ended in the red, that of energy falling by 5.58% and that of unconstrained consumption by 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 ended below 26,000 points for the first time since May 12. It fell 6.69% over the whole week, its worst weekly performance since April 2020. In China, the Shanghai SSE Composite gained 0.6% and the CSI 300 1.04%, the trend remaining buoyed by hopes of further stimulus. EXCHANGES/RATES The dollar rebounded 0.66% against other major currencies after falling 1.45% on Thursday in response to Fed announcements and US indicators of the day. The euro (-0.34%) thus returned to 1.0511 dollars after rising the day before to 1.0601. The yen lost 1.33% against the greenback and 1.01% against the single European currency after the Bank of Japan’s unsurprising status quo. In the bond market, the yield on ten-year US Treasuries, at 3.2464%, was virtually unchanged after falling nearly ten basis points on Thursday. In Europe, the ten-year German fell back to 1.683% in the very first exchanges, but French and Italian yields fell more sharply. OIL Fear of a deterioration in demand continues to weigh on the oil market even if the announcement by the United States of new sanctions targeting the Iranian petrochemical sector limits the decline. Brent fell 0.32% to 119.43 dollars a barrel and US light crude (West Texas Intermediate, WTI) fell 0.36% to 117.17 dollars. At this point, Brent is heading for its first negative weekly performance in five weeks and WTI for the first in eight weeks. (Written by Marc Angrand, with Tom Westbrook in Singapore)