ACTION IS NOTICED, NEW SANCTIONS AGAINST MOSCOW ARE MENTIONED
PARIS (Reuters) – Wall Street is expected to show little change at the open on Monday, with European stocks fluctuating mid-session but within a limited gap as Western countries could impose new sanctions on Russia and a reversal in US yields. the curve feeds fears of a recession. Futures contracts are up 0.01% for Dow Jones, 0.13% for Standard & Poor’s and 0.33% for Nasdaq. In Paris, the CAC 40 gained 0.14% to hit 6693.97 at 1137 GMT. In Frankfurt, the Dax lost 0.05% and in London the FTSE rose 0.22%.
The pan-European FTSEurofirst 300 index added 0.36%, the EuroStoxx 50 in the Eurozone rose 0.07% and the Stoxx 600 gained 0.3%.
Ukraine on Sunday accused the Russian army of carrying out the “massacre” in the city of Bucha, facts denied by Moscow but condemned by Western countries that are causing war crimes and preparing new sanctions against Russia. While the German economy minister announced that his country was working to phase out fossil fuel imports from Russia, the German banking federation BDB warned that Europe’s largest economy risks a severe recession in the event of an embargo on Russian hydrocarbons, on which it is heavily dependent.
“I think in the short term this is the main driver of what happens with the sanctions, whether we get to the end or not,” said Mark Hefele, chief investment officer at UBS Global Wealth Management.
The impact of the war in Ukraine is once again being felt in economic indicators, with the eurozone Sentix investor sentiment index falling more sharply than expected in April to -18.0 in April, the lowest level since July 2020.
WALL STREET VALUES TO FOLLOW
The Nasdaq Composite should support Twitter, whose share price rose more than 20% in premarket trading following Elon Musk’s announcement of a 9.2% stake in the social network.
VALUES IN EUROPE
In European terms, the Ukrainian conflict allows the defense groups Dassault Aviation and Thales to occupy 3.00% and 2.89%, respectively.
Shares of Telecom Italia fell 4.29% on the Milan Stock Exchange after news that the KKR fund will refuse to file a formal takeover bid for the Italian group unless it gains access to its financial accounts.
EasyJet plunges 1.62% as rising COVID-19 cases among airline employees forced the airline to cancel more than 200 flights over the weekend.
Shares of fashion group Ted Baker jumped 14.04% after launching a listing process after Sycamore raised a takeover bid.
In Switzerland, Novartis shares rose 1.66% after announcing that it will integrate its pharmaceutical and oncology divisions into its innovative medical business, aiming to save at least $1 billion by 2024.
The rise in US bond yields continues on expectations of a tightening of monetary policy, backed by a strong employment report on Friday.
The U.S. yield curve is still inverted between two and ten years, and investors believe that the magnitude of potential monetary tightening in the future will lead to a sharp economic slowdown or even a recession: a two-year at 2.4343% above the ten-year, which displayed at 2.397% (+2.2 basis points).
“The inversion of the curve has preceded every recession in the past 60 years, including the latest caused by the COVID-19 pandemic,” analysts at Commerzbank said.
In Europe, sovereign yields are falling. Ten-year German lost seven basis points to 0.49% after a four-year high of 0.741% on Tuesday.
“We believe the market has been too aggressive in its assessment of the normalization of the European Central Bank’s monetary policy,” said David Riley, chief investment officer at BlueBay Asset Management.
Money markets expect the ECB to raise rates by almost 60 basis points by the end of the year.
On the foreign exchange market, the euro lost 0.46% near $1.1 after Germany and France called for a new round of sanctions against Moscow over serious allegations of war crimes in Ukraine.
The dollar, supported by rising Treasury yields, is up 0.2% against a basket of benchmark currencies.
Oil has risen slightly in price, the use of strategic crude oil reserves by several large countries in the face of a sharp increase in prices does not help allay concerns about supplies due to the war in Ukraine and the absence of an agreement on the Iranian nuclear program.
Brent is trading at $104.92 a barrel, up 0.4%, while WTI is $99.85, up 0.5%.
(Letitia Volga, edited by Mathieu Protar)