(ABM FN-Dow Jones) The European stock markets will open sharply lower on Monday, as the attack on Ukraine is fully pushed, safe havens when the dollar rises and the oil price even explodes.
IG forecasts an opening loss of 394 points for the German DAX, a minus of 176 points for the French CAC 40 and a decrease of 169 points for the British FTSE 100.
Stock markets in Europe turned dark red on Friday amid high concerns about the war in Ukraine after the Russian attack on a nuclear power plant in Zaporizhzhya.
“The reckless shelling of a Ukrainian nuclear power plant by Russian forces this morning shows that Putin is increasingly desperate for victory despite numerous setbacks, and with little sign of his willingness to back down,” said Michael Hewson of CMC Markets’ market analyst. The stubbornness of the Ukrainian armed forces makes him even more angry, “which further increases the uncertainty”, according to the analyst.
Putin’s actions raise the question of whether Russia will follow scorched earth tactics to crush Ukraine’s resistance, Hewson said.
According to the analyst, investors massively sold European equities last week, accelerating a decline that started late last month into the last two days. The German DAX lost about 10 percent on a weekly basis, as did the CAC 40.
Bank of America believes that sentiment among European buyers will come under significant pressure in the coming quarters due to higher energy prices and increasing uncertainty due to the war in Ukraine. This makes European equities unattractive.
The US bank expects the purchasing managers’ index for the eurozone to fall to 49 in the third quarter. An index reading below 50 indicates contraction. Previously, the bank’s economists had expected a year-end decline to 52, ie a slowdown in growth, but still growth.
A slowdown in growth in combination with rising interest rates makes European equities not a popular investment, according to Bank of America. Investment strategist Sebastian Raedler expects the Stoxx Europe 600 index to fall by 7 percent to 410 points in the third quarter. He believes that this scenario can only be avoided if the war in Ukraine ends quickly.
Bank of America has an Underweight rating on European equities. Cyclical values in particular should be avoided, according to Raedler. On the contrary, the advice for food and beverages adjusted the bank upwards to Overweight.
Company news
In Paris, only Thales managed to rise slightly on Friday. With a loss of more than 9 percent, Société Générale was the last in the CAC 40, which ended about 10 percent lower on a weekly basis.
In Frankfurt, only utility company RWE finished in the green, with a plus of about 5 percent. The DAX has lost around 10 percent this week. The strongest fall on Friday was Deutsche Bank, which lost almost 9 percent.
The latest sanctions against Russia have a negative impact of 0.7 billion euros for ING, the bank announced on Friday morning. The stock lost more than 9.5 percent.
Euro STOXX 50 3,556.01 (-5.0%)
STOXX Europe 600 421,78 (-3,6%)
DAX 13.094,54 (-4,4%)
CAC 40 6,061.66 (-5.0%)
FTSE 100 6,987.14 (-3.5%)
SMI 11,300.13 (-3.2%)
AEX 671,73 (-4,8%)
BEL 20 3,760.43 (-3.0%)
FTSE MIB 22.464.86 (-6,2%)
IBEX 35 7.720,90 (-3,6%)
US EQUITIES
Wall Street will face a red opening on Monday.
US stocks also closed lower on Friday. The US stock markets remained under the spell of the war in Ukraine. Last week, the S&P and Dow lost more than 1 percent and the Nasdaq nearly 3 percent.
Market analyst Jeffrey Halley of Oanda concludes that Russia no longer shuns tactics that endanger all of Europe. Surrounding the Zaporizhzhya nuclear power plant that caught fire last night after a Russian attack, lie some of the most important agricultural areas in Ukraine. “It doesn’t take a genius to extrapolate the potential risks of that scenario,” Halley said. The plant is now said to be in the hands of the Russian army.
The WTI oil price, which has risen by about 26 percent this week as a result of the war and sanctions against Russia, was above $115 on Friday.
The US jobs report, which normally attracts a lot of attention from investors, seems to confirm what the market already knows on Friday: that the Federal Reserve will raise interest rates later this month.
Figures from the US Department of Labor showed that the number of US jobs rose by 678,000 in February, significantly more than the 440,000 jobs expected. Growth in previous months was also revised upwards.
The unemployment rate fell from 4 percent in January to 3.8 percent in February. On an annual basis, there was a 5.1 percent wage increase, significantly less than the 5.8 percent economists had expected.
“We have a very tight labor market and that confirms that there is plenty of room for the Fed to raise interest rates,” said AvaTrade market analyst Naeem Aslam.
Company news
Broadcom closed 3 percent higher after the US chip and software maker reported higher quarterly revenue and profit on Thursday evening. Revenues for the current quarter are expected to be approximately $7.9 billion, representing a 20 percent year-over-year increase.
Sweetgreen rose more than 25 percent. The restaurant chain, which serves salads, performed better than expected in the past quarter. The outlook also exceeded expectations.
Airbnb suspends its operations in Russia and Belarus. The stock fell 6 percent. Microsoft, which had to give up 2 percent, will stop selling its products and services in Russia.
Smith & Wesson ended 12.5 percent lower after the company said the weapons market “has cooled significantly” since the height of the coronavirus crisis.
Gap rose marginally after the fashion retailer released better-than-expected fourth-quarter results and presented a strong outlook.
S&P 500 index 4.329 (-0,8%)
Dow Jones index 33.615 (0,5%)
Nasdaq Composite 13.313 (-1,7%)
ASIA
Asian stocks were lower across the board on Monday.
Nikkei 225 25.213,15 (-3,0%)
Shanghai Composite 3.383,56 (-1,9%)
Hang Seng 21,185.42 (-3.3%)
EVALUATE
The euro/dollar was trading at 1.0879 this morning. When the US markets closed on Friday, the currency pair moved at 1.0930.
USD/JPY Yen 114,91
EUR/USD Euro 1,0879
EUR/JPY Yen 125,03
MACRO-AGENDA:
04:00 Trade Balance – January and February (Chi)
21:00 Consumer credit – January (US)
COMPANY NEWS:
– No agenda items
Bron: ABM Financial News
–
From Beursplein 5, the editors of ABM Financial News keep a close eye on developments on the stock exchanges, and the Amsterdam stock exchange in particular. The information in this column is not intended as professional investment advice or as a recommendation to make certain investments.
