European stocks should continue their rebound

PARIS (Reuters) – The main European stock markets are expected to rise on Tuesday in the wake of Asian markets and Wall Street is currently heading for an increase of more than 1%, with bargain purchases prevailing for the moment after last week’s sharp decline and despite nagging interest rate and inflation concerns.

Futures contracts on indices suggest an increase of 0.44% for the CAC 40 in Paris, 0.48% for the Dax in Frankfurt, 0.29% for the FTSE 100 in London and 0.49% for the EuroStoxx 50.

All should thus amplify the rebound that began on Monday after the sharp declines of the previous two or even three weeks. But while bargain hunting makes sense in the current environment, it is still too early to speak of a lasting rebound, as the debate over inflation and the scale of the rate hikes needed to curb it is far from over.

The first full-scale test of investors’ renewed interest in risky assets will be the publication at 2:00 p.m. GMT of the monthly home resale figures in the United States, the real estate market being one of the most directly threatened by the rise in rates. .

But the main meeting of the week will be Wednesday the hearing in Congress of Jerome Powell, the chairman of the Federal Reserve, a week after the rate hike of three quarters of points decided by the central bank.

On Monday, St. Louis Fed Chairman James Bullard said he hoped the United States could achieve a soft economic landing, as it did during the 1994 monetary tightening cycle.

AT WALL STREET

Wall Street is currently expected to be in the green after the three-day weekend that followed the worst week for the Standard & Poor’s 500 index since March 2020.

Index futures suggest a rise of 1.3% for the Dow Jones, 1.41% for the Standard & Poor’s 500 and 1.46% for the Nasdaq.

On Friday, ahead of the “Juneteenth” long weekend, the Dow was down 0.13%, or 38.29 points, at 29,888.78, the S&P 500 was up 8.07 points, or 0.22%, at 3,674.84 and the Nasdaq Composite rose 152.25 points (+1.43%) to 10,798.35.

Over the past week as a whole, the Dow and the Nasdaq lost 4.8% and the S&P 500 5.8%.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index ended up 1.84%, its best performance since May 30, the day after a three-month low, taking advantage of renewed interest in cyclical stocks. and technological.

In China, the rise at the start of the session, favored by renewed optimism in the real estate market, lost steam over the hours and the major indices are now moving into the red: the Shanghai SSE Composite gives up 0.84% and the CSI 300 0.76%. In Hong Kong, however, the Hang Seng still advances by 1.23% and the local index of technology stocks by 1.02%.

CHANGES

Affected by the renewed appetite for riskier assets, the dollar lost 0.28% against other major currencies, including the euro, which rose to 1.0519 (+0.10%).

However, the yen remains under pressure, not far from the 24-year low hit last week against the greenback at 135.58.

The Australian dollar is benefiting from statements by the governor of the RBA, the Australian central bank, on the need for “more interest rate hikes”.

Bitcoin (+2.37%) is currently holding above the $20,000 threshold, at 21,042.36.

RATE

The yield on ten-year US government bonds is up slightly in Asian trading at 3.2749%.

The rise in yields is much more marked in the first exchanges in Europe: the ten-year German takes more than seven basis points to 1.731%, its French equivalent more than eight points to 2.297%, the Italian ten points to 3.773%.

OIL

The oil market is up sharply, with concerns over global supply tensions again outweighing the prospect of a slowdown in demand after last week’s steep drop.

Brent gained 0.7% to 114.93 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.79% to 111.52 dollars.

NO MAJOR ECONOMIC INDICATOR ON THE JUNE 21 AGENDA

(Writing by Marc Angrand, editing by Kate Entringer)