The rebound should continue in Europe – archyde

by Blandine Henault

(Reuters) – The main European stock markets are expected to continue their rebound on Thursday at the opening, as the lull is confirmed on the bond yields front, although other reasons for concern remain.

Futures are reporting an increase of 0.53% for the Dax in Frankfurt, 0.54% for the FTSE in London and 0.57% for the EuroStoxx50.

The first indications available also give the Parisian CAC 40 up 0.49% at the opening.

European indices recovered on Wednesday some of the ground lost the day before, their worst session since July, thanks to the decline in bond yields.

But concerns persist, whether about inflationary pressures, the possibility of a “shutdown” in the United States or the economic situation in China.

On Wall Street, moreover, the meeting was more mixed on Wednesday, in particular because of the blockage in Congress on the financing of the federal state.

With Republican senators opposed to raising the debt ceiling to $ 2.840 billion to avoid the country defaulting next month, Congress is due to pass a bipartisan resolution by midnight Thursday to provide funding for government services until early December.

In China, manufacturing activity contracted unexpectedly in September as a result of rising raw material costs and power cuts.

The Evergrande file also remains pending: some bondholders of the Chinese property developer have not received payment of interest on a bond loan due Wednesday, according to two sources familiar with the matter. Last week already, the group had not met a deadline on a bond loan.

RATES / CHANGES

The yield on ten-year Treasuries fell another two basis points to 1.5202%, after having already given up five basis points on Wednesday.

At the start of the week, it climbed to 1.567%, the highest since June, under the effect of inflation expectations and monetary tightening by the Federal Reserve, leading to a sharp sell-off in the equity markets.

Despite the fall in US rates, the dollar remains buoyed by its quality of safe haven in a context of multiple concerns.

It remained Thursday near a one-year high against a basket of benchmark currencies and close to a peak since July 2020 against the euro, which is moving around the threshold of $ 1.16.

A WALL STREET

Futures on US indices move up 0.6% to 0.8%, which should support the trend in Europe, after the scattered close of the day before in New York.

The Dow Jones index gained 0.26% to 34,390.72 points, the S & P-500 gained 0.16% to 4,359.46 points while the Nasdaq Composite fell 0.24% to 14,512.44 points .

IN ASIA

The Tokyo Stock Exchange is unchanged (-0.01%) as the close approaches, with limited initiatives following the appointment of Fumio Kishida as head of the Liberal Democratic Party (PLD), who is expected to soon become Prime Minister.

In China, the composite index of the Shanghai Stock Exchange is up 0.67%, despite the disappointment on the manufacturing PMI indicator, thanks to the rise in energy values ​​as Beijing has stepped up its efforts to facing the shortage of electricity.

In Hong Kong, the Hang Seng lost 0.77%, penalized by the decline in technology stocks against the backdrop of increased regulation of the sector.

OIL

Crude prices fell, penalized by the announcement of an unexpected increase in crude inventories last week in the United States.

The barrel of Brent lost 0.23% to 78.46 dollars and that of US light crude (WTI) fell 0.04% to 74.8 dollars.

(edited by Jean-Stéphane Brosse)