REBOUND IN SIGHT FOR ACTIONS AFTER A WEEK IN THE RED
by Marc Angrand
PARIS (Reuters) – The main European stock markets are expected to rise on Monday at the opening in the wake of Asian markets and the positive closure of Wall Street on Friday, the ebb of concerns over US monetary policy favoring cheap purchases after heavy losses from previous sessions.
Index futures suggest an increase of 0.79% for the CAC 40 in Paris, 0.8% for the Dax in Frankfurt, 0.67% for the FTSE 100 in London and 0.81% for the EuroStoxx 50.
The latter lost nearly 2% last week and the CAC 40 3.91%, its worst weekly performance since October, due to fears related to the health situation, doubts about the strength of the economic recovery and questions about US monetary policy.
Market sentiment improved a bit on Friday, however, with remarks by Robert Kaplan, chairman of the Federal Reserve of Dallas, on the possibility that the impact of the Delta variant of the coronavirus would call into question his position in favor of a decrease in the Fed support for the economy.
Another positive element: the absence of any new case of local transmission of the virus in China over the last 24 hours, a first for more than a month.
The morning in Europe will be enlivened by the publication of the first results of IHS Markit’s PMI surveys on private sector activity, which could better assess the economic impact of the Delta variant. In Japan, manufacturing activity decelerated and that of services suffered its worst contraction since May 2020 according to “flash” PMIs.
But the most anticipated meeting of the week will be the intervention of Jerome Powell, the president of the Fed, at the Jackson Hole seminar on Friday, which could provide new indications on the evolution of the debates within the institution. as for “tapering”, the upcoming reduction of its bond purchases on the markets.
VALUES TO FOLLOW:
A WALL STREET
The New York Stock Exchange ended higher on Friday, helped ease concerns over the spread of the Delta variant of the coronavirus and the Federal Reserve’s tightening of monetary policy.
The Dow Jones index gained 0.65%, or 225.96 points, to 35,120.08 points, the Standard & Poor’s 500 gained 35.87 points, or 0.81%, to 4,441.67 and the Nasdaq Composite advanced 172.88 points (1.19%) to 14,714.66 points.
This rebound, driven by large stocks in the high technology sector, allowed US stocks to reduce their weekly losses: over the week, the S & P-500 lost 0.59%, the Dow 1.12% and the Nasdaq 0 , 73%.
For now, index futures suggest a further rebound with an increase of around 0.3%.
On the Tokyo Stock Exchange, the Nikkei index ended the day up 1.78%, its best performance in a month, driven by cheap purchases after falling Friday to its lowest level since December.
The rebound benefited, among other things, automotive stocks, shaken last week by the announcement of a 40% reduction in Toyota’s production in September: Toyota shares regained 3.62%, Nissan 3.51%, Denso 6.68%.
In China, the Shanghai Composite SSE is up 1.4% and the CSI 300 by 1.35%, taking advantage of the absence of a new case of COVID-19 in the country.
CHANGES / RATES
The dollar lost ground against the other major currencies (-0.17%), the remarks of Robert Kaplan continuing to encourage profit taking after the high of more than nine months reached Friday.
The euro goes back to 1.1715 dollars against 1.1662 at the lowest on Friday, a level to which it had not returned since last November.
Bitcoin, for its part, crossed the $ 50,000 mark for the first time since May 15.
On the bond market, the yield on ten-year US Treasuries rose to 1.2701% as the resurgence of risk aversion had caused it to lose 12 basis points in five sessions.
In Europe, that of the ten-year German Bund is almost stable in early trading at -0.487%.
The oil market is on the rise after seven consecutive sessions of decline and its worst weekly losses in nine months, the decline of the dollar favoring purchases on the cheap.
Brent, which had returned to its May level, gained 2.01% to 66.49 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.87% to 63.30 dollars.
Both fell more than 8% last week, mainly due to fears that the spread of the Delta variant would dampen the recovery in global demand.
(Edited by Blandine Hénault)