Rise in sight for European stock markets but the trend remains fragile

by Laetitia Volga

PARIS (Reuters) – The main European stock markets are expected to rise on Wednesday at the opening, supported by the rise of Wall Street the day before, although investors remain cautious amid concerns about inflation and the tightening of monetary policies.

The first indications available indicate an increase of 0.26% for the Parisian CAC 40, 0.44% for the Dax in Frankfurt, 0.29% for the FTSE in London and 0.53% for the EuroStoxx 50 .

Major Wall Street stock indices gained nearly 1% on Tuesday, driven by gains in technology stocks, energy sector stocks and falling US bond yields.

European equities should take advantage of this positive momentum to rebound but market sentiment remains fragile as investors anticipate further monetary policy tightening from the Federal Reserve next week and more restrictive rate rhetoric from the European Central Bank. Thursday in the face of rising inflation.

The market is waiting for the publication of monthly consumer price figures in the United States on Friday to see more clearly on the trajectory of inflation and therefore on the policy of the Fed.

AT WALL STREET

The Dow Jones index gained 0.80% on Tuesday to 33,180.14 points, the S&P-500 gained 0.95% to 4,160.68 points and the Nasdaq Composite advanced 0.94% to 12,175.23 points. [.NFR]

Driven by Apple (+1.76%) and Microsoft (+1.39%), the technology sector increased by 1%.

Meanwhile, Target fell 2.3% after announcing it was forced to offer deeper discounts to customers and reduce inventory of high-margin consumer non-essentials.

Futures so far suggest a slightly lower open as the yield on 10-year Treasuries rises to 3%.

IN ASIA

In Tokyo, the Nikkei index took 0.87%, the rise on Wall Street the day before benefiting technology stocks while the energy sector benefited from the high level of oil prices.

The contraction of the Japanese economy in the first quarter has also been revised downwards, to 0.5% at an annualized rate after 1.0% announced in the first estimate.

In China, the main stock market indices are in the red, penalized by the drop in the battery manufacturer CATL (-6.86%), supplier of Tesla, following information that BYD (+1.57%) should now supply the American automotive group with batteries.

The CSI 300 lost 0.34% and the Shanghai SSE Composite 0.52%.

CHANGES

The dollar gained 0.22% against a basket of international currencies and the euro lost 0.09% against the greenback, at 1.0689.

During the session, the yen reached a new low for seven years against the euro and for 20 years against the dollar, penalized by the divergence in monetary policy between the Bank of Japan, ultra-accommodative, and the other central banks including the ECB and the Fed.

RATE

In the bond market, the yield on 10-year Treasuries advanced four basis points to 3.0104% as investors anticipate another 50 basis point Fed rate hike next week, as well as at the July meeting.

OIL

The oil market rises slightly before the publication at 2:30 p.m. GMT of figures on crude inventories in the United States by the Energy Information Administration (EIA).

Brent 0.32% to $120.95 a barrel and US light crude (West Texas Intermediate, WTI) 0.45% to $119.95.

(Written by Laetitia Volga, edited by Nicolas Delame)