Relief in China outweighs concerns about inflation – 17.05.2022, 13:53


EUROPEAN SCHOLARSHIPS DEVELOP

PARIS (Reuters) – Wall Street is expected to rise sharply and European shares surged mid-session on Tuesday as the dollar retreats and investors ditch government bonds, the latest news from China favors a recovery in risk appetite, even if they will do it. do not hide the risks associated with inflation and interest rates.

Futures contracts for major New York indexes are up 1.47% for the Dow Jones, 1.55% for the Standard & Poor’s 500 and 1.88% for the Nasdaq.

In Paris, the CAC 40 added 1.41% to 6,437.11 around 1100 GMT, the highest since May 5. In London, the FTSE 100 rose 0.94%, while the Dax rose 1.53% in Frankfurt.

The EuroStoxx 50 rose 1.59%, the FTSEurofirst 300 rose 1.48% and the Stoxx 600 rose 1.48%.

Shanghai authorities have lifted some of the strict medical restrictions imposed in recent weeks in an attempt to stem the resurgence of the COVID-19 outbreak after three consecutive days without new cases outside quarantine zones.

At the same time, according to a number of sources, Chinese Vice Premier Liu He was supposed to meet during the day with the leaders of the high-tech sector, information about which gives hope for a reduction in regulatory pressure on the sector.

China’s CSI 300 Large Companies Index ended the session up 1.25%, while Hong Kong’s tech index jumped 5.78%.

In Europe, employment data from France and the United Kingdom, as well as a slight upward revision in euro area growth in the first quarter, were generally well received.

But if optimism prevails, fears about growth and inflation remain high, especially as economic data released on Monday in China, like those in the United States, fuel fears of a sharp slowdown in activity.

As such, markets will be keeping an eye on US retail sales and industrial production ahead of the opening of Wall Street trading, as well as public appearances by several Federal Reserve officials, including Chairman Jerome Powell, at 1800 GMT.

VALUES IN EUROPE

All main sectors of the European rating are developing in the green zone at noon, the largest growth is observed in the commodity segment, whose Stoxx index added 3%, and in the high-tech segment (+2.80%).

In Paris, Engie holds 5.97% at the head of CAC 40 after boosting its annual figures and announcing an agreement with Russian giant Gazprom to pay for its gas purchases.

Daimler Truck (+7.21%) and Caixabank (+3.79%) also benefited from results favored by analysts.

Lagging the market, Vodafone (-0.13%) is ignored, its FY 2023 forecast is below consensus.

INDICATOR

The return of investors to equities is putting government bonds at a disadvantage, driving yields up, with ten-year US Treasuries yielding four basis points to 2.924% and two-year plus six points to 2.6319%.

In the eurozone, the movement, already noticeable since the beginning of the session, was reinforced after statements by Klaas Noth, the governor of the central bank of the Netherlands, who considers a quarter-point rate hike in July “realistic”. “, but does not exclude an increase of half a point.

Thus, the yield on ten-year German bonds is more than eight points to 1.021%.

Money market futures are now valued at a total European Central Bank (ECB) rate hike of 105 basis points by the end of the year.

CHANGES

Klaas Knot’s comments also benefit the euro, which gained 0.81% against the dollar to 1.0515 and returned to levels last Wednesday.

On the contrary, the US dollar continues to decline against other major currencies, which began on Friday after 20-year highs: the index, which allows you to trace its fluctuations against the base basket, is losing 0.62%, more than 1.5%. 4% below Friday’s peak.

BUTTER

The price of oil reached its highest level in seven weeks, which continued to be supported by the prospect of a European Union embargo on Russian oil, despite the stubborn resistance of Hungary, and the hope of renewed demand from China.

Brent crude rose 0.77% to $115.12 a barrel after hitting 115.53, the highest level since March 28, while US light crude (West Texas Intermediate, WTI) rose 0.71% to $115.01 dollar after peaking at 115.43.

(written by Marc Angrande)

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