We start by reviewing the panorama on the European stock markets
Shares of banks and automakers boosted European stocks on Monday as investors continued to bet on sectors linked to the economy, hoping for a solid economic rebound in the aftermath of the coronary crisis.
The pan-European STOXX 600 index gained 0.4%, and the banking sector rose 2% to hit a new one-year high.
Spain’s Banco de Sabadell rose 5% to top the STOXX 600 index, while HSBC, Banco Santander and ING Groep rose more than 2%.
Automakers and insurers also gained more than 1%, while sectors considered representative of fixed income, such as utilities and personal and household goods, were a drag.
However, Asian markets and Wall Street futures were weaker as the passage of a $ 1.9 trillion stimulus bill in the US Senate and rising oil prices fueled the concern about inflation, raising the yields of the public debt in Europe and the United States.
“The reflation trade is supporting more European equities in general, because they are not as inclined towards growth and technology as the United States,” said Neil Wilson, chief market analyst at Markets.com.
“There is some progress in trade between Europe and the United States and that is good for some companies like Rolls Royce.”
Aircraft engine maker Rolls-Royce rose 3% to top Britain’s FTSE 100 index gains. The European Union and the United States agreed on Friday to suspend tariffs on billions of dollars of imports in a 16-year dispute over subsidies for airplanes.
Meanwhile, schools in England reopened to all students on Monday, marking the first step towards normalcy as COVID-19 infection rates decline.
The data was also positive: the Ifo economic institute said that the mood of the German manufacturing sector improved for the third consecutive month in February.
British education group Pearson erased initial losses and rose 2.8% after reporting a drop in revenue and adjusted operating profit in 2020.
German food kit delivery company HelloFresh sank 5.7% to the bottom of the STOXX 600 after BNP Paribas downgraded the value to underform.
The London Stock Exchange fell 5.4%, extending its slide since Friday, when it forecast higher costs to integrate data and analytics company Refinitiv, which it acquired in January for $ 27 billion. (Information from Sruthi Shankar in Bengaluru; edited by Subhranshu Sahu and Saumyadeb Chakrabarty) Reuters. Translate serenitymarkets.com
And now let’s see how the global markets are
Global stocks fell on Monday as the passage of a $ 1.9 trillion stimulus bill by the U.S. Senate put further pressure on Treasuries and highly valued tech stocks. , which increased the fear of inflation.
These concerns overshadowed the prospect that the stimulus would give another boost to the world’s leading economy, likely to help global growth rebound more quickly from the COVID-19 recession.
Analysts expect a sharp acceleration in inflation, fueled in part by the latest spike in oil prices, which on Monday passed $ 70 for the first time since the pandemic began.
“Between reflation, inflation risk and equity valuations, there are many reasons the market is nervous about the appreciation of bonds,” said Natixis strategist Florent Pochon.
“Equity valuations will, of course, remain a hot topic, particularly for excessively wealthy sectors,” he also said, adding, however, that sales should be seen as buying opportunities as central banks continue to being “structurally dovish.”
The MSCI World Equity Index was down 0.1% at 0828 GMT, as gains in European travel and cyclical stocks were offset by losses in Asia.
Chinese stocks posted their biggest drop in seven months, down 3.5%, on concerns that the Chinese authorities may tighten their policy to curb soaring valuations.
Nasdaq futures fell 2% in early European trading, reversing initial gains, while S&P 500 futures fell 1% as investors did not notice the benefits of the tax package.
According to JPMorgan, every trillion dollars of fiscal stimulus adds between 4 and 5 dollars to the earnings per share of companies, which implies a rise of 6-7% for the rest of the year.
Equity investors were encouraged on Friday by US data that showed non-farm payrolls increased by 379,000 jobs last month, while the unemployment rate fell to 6.2%, in a positive sign for income. , business spending and profits.
US Treasury Secretary Janet Yellen tried to counter inflation concerns by noting that the true unemployment rate was approaching 10% and that the job market was still slack.
However, 10-year US Treasury yields hit a one-year high of 1.626% after the data, and stood at 1.594% on Monday.
US yields rose 16 basis points for the week, while Germans were down 4 basis points.
The European Central Bank meets Thursday amid rumors that it will seek ways to curb further increases in euro zone yields.
The divergent trajectory of yields pushed the dollar against the euro, which fell to a three-month low of $ 1.1891.
BofA analyst Athanasios Vamvakidis argued that the potent mix of US stimulus, accelerating reopening and increased consumer power were a clear positive for the dollar.
“Including the current proposed stimulus package and the further increase in an infrastructure bill in the second half, the total US fiscal support is six times greater than the EU recovery fund,” he said. “The Federal Reserve is also supportive, as the US money supply grows twice as fast as that of the eurozone.”
The dollar index soared to levels not seen since late November and last stood at 92.06, well above its February low of 89.677.
The greenback also gained ground against the underperforming yen, hitting a nine-month high at 108.63, last trading at 108.4.
The jump in yields weighed on gold, which does not offer a fixed return, dropping it 0.1% to $ 1,698 an ounce, and just above a nine-month low.
Oil prices hit the highest levels in more than a year after Yemen’s Houthi forces fired drones and missiles into the heart of Saudi Arabia’s oil industry on Sunday, raising concerns about production.
Prices had already been supported by the decision of OPEC and its allies not to increase supply in April.
Brent rose 1.1% to $ 70.14 a barrel, while US crude rose 1% to $ 66.8 a barrel. (Reported by Danilo Masoni and Wayne Cole; edited by Alex Richardson) Reuters. Translate serenitymarkets
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