Rise in sight in Europe, ECB and US inflation expected this week

Rise in sight in Europe, ECB and US inflation expected this week

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RISE IN VIEW IN EUROPE, ECB AND US INFLATION EXPECTED THIS WEEK

by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected to rebound on Monday in the wake of the stabilization of the Asian markets while the week which begins will be marked by the monetary policy meeting of the European Central Bank and the inflation figures in the UNITED STATES.

According to the first indications available, the Parisian CAC 40 should open up 0.73%, the Dax in Frankfurt up 0.95%, while the FTSE in London could gain up to 0.90% after four days of closure linked to the celebrations of the Platinum Jubilee of Queen Elizabeth II. The Eurostoxx 50 is expected up 0.93%.

The economic agenda of the day in Europe and the United States is empty but Thursday will be held the meeting of the Governing Council of the European Central Bank (ECB) and Friday will be published the statistics of consumer prices in the United States for the month of May.

The persistence of high inflation and fears of an acceleration of monetary tightening are still at the heart of investors’ concerns.

The report released by the Labor Department on Friday showed that the US economy added more jobs in May than expected (390,000 against 325,000 expected), while the unemployment rate remained stable at 3.6%, which testifies to the robustness of the labor market and could encourage the US Federal Reserve to accelerate the rise in its interest rates.

In the United States, the markets anticipate rate hikes of half a point in June and July and of nearly 200 basis points by the end of the year.

In the euro zone, the European Central Bank (ECB) has indicated that its deposit rate will return to positive territory by the end of September and the money markets in the euro zone are now expecting a 125 basis point increase in rates by the end of September. end of the year and an increase of 100 points by October.

VALUES TO FOLLOW:

The United States has authorized Italian and Spanish oil companies Eni and Repsol to deliver oil from Venezuela to Europe from next month to replace Russian crude, five sources familiar with the matter said.

AT WALL STREET

The New York Stock Exchange ended lower on Friday as U.S. jobs data dashed hopes that the Federal Reserve (Fed) will pause aggressive monetary policy tightening to stem the surge in inflation.

The Dow Jones index fell 1.05% (348.58 points) to 32,899.70 points, the S&P-500 1.63% (68.28 points) to 4,108.54 points and the Nasdaq Composite 2.47% (304.16 points) to 12,012.73 points.

Apple, which holds its traditional annual developer conference on Monday, lost 3.9% Reuters reported that the European Union should agree on June 7 on the adoption of a universal USB-C charger for all smartphone and tablet manufacturers.

Tesla plunged 9.2%, its boss, Elon Musk, having expressed in an email, seen by Reuters, his doubts about the economic outlook.

IN ASIA

The Tokyo Stock Exchange ended up slightly on Monday, driven by the rise in US stock futures and Chinese stocks. The Nikkei index gained 0.56% to 27,915.89 points and the broader Topix gained 0.31% to 1,939.19 points.

The MSCI index comprising stocks from Asia and the Pacific (excluding Japan) gained 0.12%

In China, the Shanghai SSE Composite gained 0.76% and the CSI 300 1.21% after the publication of the Caixin Services PMI for May. Although this index shows a contraction in activity for the third consecutive month, it nevertheless indicates an improvement, going from 36.2 in April to 41.4 in May, the bar of 50 separating growth and decline.

CHANGES

The prospect of an imminent ECB rate hike is supporting the euro which has stabilized above $1.07, well off its recent low at 1.0348. The single European currency gained 0.07% on Monday to 1.0727 dollars and hit a seven-year high against the yen at 140.35 after jumping 2.9% last week.

The dollar, also supported by rate hike expectations, was stable (-0.05%) against a basket of benchmark currencies after rising 0.4% last week.

RATE

The yield on ten-year US Treasuries, which hit a two-week high of 2.986% on Friday after the jobs report, is flat on Monday at 2.9497%.

In Europe, the ten-year German Bund yield, which climbed Friday in session to 1.281%, the highest since 2014, is also virtually unchanged at 1.267%.

OIL

Oil prices are supported by the sharp rise in the price of crude deliveries from Saudi Arabia to Asia for the month of July and the fear of insufficient supply despite the OPEC+ decision to increase its monthly production of 648,000 barrels per day (bpd) in July and August.

“Perhaps a volume of one-third to only half of what OPEC+ has promised will actually come to market in the next two months,” said Vivek Dhar, commodity analyst at CBA.

“Even though this increase is absolutely necessary, it falls short of demand growth expectations, particularly in view of the European Union’s partial ban on Russian oil imports,” he added.

The barrel of Brent took 0.58% to 120.41 dollars and that of American light crude (West Texas Intermediate, WTI) 0.61% to 119.55 dollars.

NO MAJOR ECONOMIC INDICATOR ON THE JUNE 6 AGENDA

(Written by Claude Chendjou)

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