Equities and euro rise, ECB and China in support – 09/09/2022, 13:46

Equities and euro rise, ECB and China in support – 09/09/2022, 13:46

Equities and euro rise, ECB and China in support – 09/09/2022, 13:46

SCHOLARSHIPS AND EURO ON SALE, ECB AND CHINA IN SUPPORT

SCHOLARSHIPS AND EURO ON SALE, ECB AND CHINA IN SUPPORT

PARIS (Reuters) – Wall Street is expected to rise as European stocks rose more than 1% mid-session on Friday, erasing losses since the beginning of the week thanks to the rebound in mining and banking stocks, while the euro continues to benefit from the European Central Bank (ECB) rate hike and the decline in the dollar.

Futures contracts on major New York indices suggest an increase of 0.8% for the Dow Jones, 0.86% for the Standard & Poor’s 500 and 1.13% for the Nasdaq.

In Paris, the CAC 40 gained 1.66% to 6,227.52 points around 11:15 GMT, the highest since Aug.31. In London the FTSE 100 takes 1.53% and in Frankfurt the Dax gains 1.43%.

The EuroStoxx 50 index is up by 1.75%, the FTSEurofirst 300 by 1.52% and the Stoxx 600 by 1.53%.

The latter currently shows a weekly increase of almost 1% and the CAC 40 a gain of 0.9%, while the first sessions of the week were dominated by recession fears linked to the energy crisis.

This turnaround is favored, among other things, by the announcement of an unexpected slowdown in inflation in China, which could favor new stimulus measures.

In Europe, the fight against inflation obviously remains at the heart of investors’ concerns in the aftermath of monetary policy decisions and the ECB press conference. All the more so as the statements of various officials of the institution fuel speculation about the possibility of a new three-quarter point rate hike in October.

“The rate hike of 75 basis points and the related” hawkish “rhetoric underline the new sense of urgency that has gripped the ECB,” Commerzbank analysts said in a statement.

Investors are also awaiting the conclusions of the meeting of EU energy ministers underway in Brussels.

VALUES IN EUROPE

The European commodities sector recorded the strongest sector progress of the day with a gain of 3.81%, thanks to the rebound of base metals (+ 2% for copper + 6.6% for nickel), linked to the awakening of hopes in China.

Bank stocks (+ 2.32%) continue to benefit from ECB announcements, which should allow them to improve credit margins.

In Paris, Société Générale (+ 3.49%), BNP Paribas (+ 3.38%) and Crédit Agricole (+ 2.48%) appear, as on Thursday, in the leading package of the CAC 40.

RATE IT

Yields on US government bonds fell to 3.262% for ten-year bonds and 3.4692% for two-year bonds. They thus cancel a small portion of the increase recorded Thursday in response to statements by Jerome Powell reaffirming the determination of the Federal Reserve to reduce inflation.

In the euro area, the sharp rise in yields that began on Thursday after the ECB announcements (raising rates like the new deposit remuneration rules), continued at the beginning of the session, ended up stopping.

The German two-year thus returned to 1.295% after reaching its highest level since 2011 at 1.429% and the 10-year fell to 1.692% after a nearly three-month peak at 1.796%.

EXCHANGES The dollar fell sharply against the other major currencies (-0.95%) and is heading towards a negative weekly performance after three weeks of strong gains.

Its decline is explained by the statements of Japanese officials suggesting a possible intervention in support of the yen and with the upward correction of the yuan by the People’s Bank of China, but above all by the tightening of the tones of the ECB on Thursday, accentuated by the statements by several of its officials on Friday.

The euro thus gained 0.67% against the greenback at 1.0061 after hitting a peak of 1.0112, the highest level since 18 August.

OIL

On the oil market, the beneficial effect of the dollar’s fall adds to fears of new supply tensions in the event of a halt to Russian exports to the West.

Brent was up 1.94% at $ 90.88 a barrel and US light crude (West Texas Intermediate, WTI) 1.92% at $ 85.14.

However, both point to a weekly decline of more than 2%, due to fears of a deterioration in world demand.

(Written by Marc Angrand)

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