Global stock markets in scattered order ahead of the Fed, bond yields soar

Global markets ended mixedly on Monday, with European stock markets ending in the red on concerns over the Chinese economy, while Wall Street posted a fragile recovery ahead of the US central bank’s (Fed) monetary policy meeting.

European stock markets ended in negative territory, limiting their losses somewhat after some fell more than 2% during the session. Paris closed 1.66% lower, Frankfurt 1.13% and Milan 1.63%. London was closed for a public holiday. After being in the red for most of the session, Wall Street indices closed on a rise with the Dow Jones nibbling 0.26%. Technology-heavy Nasdaq gained 1.63%. The S&P 500 gained 0.57%.

European markets have blamed the blow for “China’s disappointing macroeconomic data showing country slowing down after its policy of zero covid health restrictions“says Harry Wolhandler, director”share managementby Meeschaert Amilton AM. Indeed, manufacturing activity in China has fallen, falling to its lowest level since February 2020 in April due to the lockdown of the country’s major cities. But the looks weremainly focused on the United States, with (…) the Fed’s monetary policy meetingTuesday and Wednesday, Vincent Boy of IG France said.

After a 0.25 percentage point hike in the key rate in March, the Fed will this time, except for a surprise, endorse a hike of half a percentage point (0.50%). It would be the first time in more than 20 years that the Federal Reserve would make a tightening of this magnitude. It should also be the beginning of a balance sheet cut to try to fight inflation at its 40-year high in the United States.

On Wall Street, after a disastrous April for the Nasdaq (-13%, worst decline since 2008), the tech stock index led the recovery thanks to several big names in tech like Microsoft (+2.50% to $284.47 ), Facebook (Meta, +5.32% to $211.13) or Google (Alphabet +1.91% to $2,343.14). But in anticipation of the Fed’s announcement, US 10-year bond yields rose to briefly touch the 3% threshold for the first time since late 2018, in anticipation of this monetary tightening. At around 8:30 PM GMT, they were at 2.98% against 2.93% on Friday.

Oil bounces back

For most of the day, oil prices are “on the other hand, due to lingering concerns about the development of Chinese demandfacing the strengthening of measures against Covid-19 in BeijingSaid Christian Parisot of Aurel BGC. But two hours before the close, the barrel of Brent from the North Sea for delivery in July, the first trading day as a benchmark contract, went green again and closed with a timid rise of 0.41% at 107, $58. A barrel of US West Texas Intermediate (WTI) for delivery in June followed, up 0.45% to $105.17.

Misplaced luxury

The luxury sector, which is heavily dependent on the Chinese market, suffered heavy losses on Monday. In Paris, Kering achieved 1.73%, LVMH 2.08%, Hermès 2.82% and L’Oréal 2.52%. In Milan, Moncler lost 2.57%, Tod’s 1.26%. In Zurich, Richemont, owner of the jewelry house Cartier, lost 3.07% and watchmaker Swatch Group 2.32%.

European banks in bad shape

European banks were in bad shape on Monday: Credit Suisse lost 2.53%, Société Générale 2.07%, UniCredit 2.75%, Banco Santander 2.72% and BNP Paribas 1.81%. Their US counterparts recovered after opening in the red: Goldman Sachs won 1.61% and Morgan Stanley 1.70%.

The German Adler sinks

The title of Adler, one of Germany’s largest real estate groups, plunged 29.23% on the Frankfurt stock exchange after auditors refused to certify the accounts of the company in turmoil for several months.

On the dollar, euro and bitcoin side

Tension in bond yields stimulated the dollar, which was approaching a 20-year high against major currencies. At around 19:00 GMT, the Dollar Index, which compares the US currency to a basket of other currencies, climbed 0.72% to 103.70 points, close to its December 2002 high, reaching 103.93 points on Thursday.

The euro fell against the greenback (-0.36% to $1.0507 for one euro) but tried to hold on to the $1.05 threshold for the first time since early 2017, under which the European currency briefly fell on Thursday had failed. at $38,354 (+0.09%).

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