Categories: Markets

In the ‘red’ (-1.3%) the European markets in the perspective of faster monetary tightening

In the ‘red’ (-1.3%) the European markets in the perspective of faster monetary tightening


European stock markets are moving in the “red” on Friday in the wake of the report of the head of the US Federal Reserve Jerome Powell that the increase in interest rates by half a percentage point is “on the table” for next month.

The chairman of the Federal Reserve stressed that the argument for a forward interest rate increase is well-founded, noting that a possible increase of 50 basis points in the Fed key interest rate will be considered at the May meeting, according to Bloomberg.

“I would say the 50 basis points will be on the table at the May meeting,” Powell told the International Monetary Fund (IMF) in Washington on Thursday.

“We are really determined to use all available tools to drive inflation back to 2%,” he said, recalling the Fed target.

Central bankers have been facing the highest levels of inflation in the world since the early 1980s after the coronavirus pandemic, exacerbated by the war in Ukraine and new lockdowns in China.

Back in Europe, French voters go to the polls on Sunday for the election of their next president. The second round of elections brings Emanuel Macron face to face with Marin Le Pen.

In a note Thursday, Goldman Sachs described the election as a turning point in France’s political course.

“If Mr Macron is re-elected, we would expect him to revive his reform agenda as a follow-up to the plan for Europe,” said analysts, led by Sven Jarry Sten.

“These reforms are largely in line with our current forecasts. In the event of Le Pen’s election, we would expect an institutional impasse due to a possible lack of a parliamentary majority in next June’s parliamentary elections and significant friction with EU partners.” .

In this climate, the pan-European index Stoxx 600 falls 1.3% to 455 points.

In the individual dashboard, the German DAX loses 1.7% to 14,250 points, the French CAC 40 falls by 1.45% to 6,620 points and the British FTSE 100 records losses of 0.8% at 7,560 points.

In the periphery, the Italian FTSE MIB slips by 1.6% to 24,410 points and the Spanish IBEX 35 loses 0.85% at 8,740 points.

In the scope of results, SAP announced that its decision to leave Russia after its invasion of Ukraine is expected to have a negative impact on its revenues by about 300 million euros. However, the growth of the revenue of the German software giant by 11% in the first quarter of 2022 exceeded the estimates.

In the individual shares, B&M slips more than 5% after the news that its CEO will retire next year. In addition, data from the United Kingdom showed that retail sales fell more than expected in March.

French luxury goods retailer Kering also lost more than 5% amid concerns about its sales in China, as “zero duty” policy worries investors.

Unexpected increase for the composite PMI of the Eurozone

The eurozone composite PMI rose unexpectedly to 55.8 in April from 54.9 in March, with manufacturing and services moving in the opposite direction.

The rise in the composite PMI refuted analysts’ estimates in a Reuters poll for a drop to 53.9 points.

“Details showed that this increase was entirely due to the services component, but the manufacturing PMI declined as supply constraints worsened due to the war in Ukraine and lockdowns in China,” said Jessica Hinds of Capital Economics.

The PMI for the services sector rose to an 8-month high of 57.7 in April from 55.6 in March. The average forecast in a Reuters poll “saw” a drop to 55.0 points.

However, the manufacturing PMI fell to a 16-month low of 55.3 points from 56.5 in March, although it exceeded analysts’ forecast of 54.7 points. The manufacturing PMI fell to 50.4 in April from 53.1 in March.

Negative signs are prevalent in Asia

Most stock markets are down on Friday in the Asia-Pacific region, with investors weighing in on comments by Chinese central bank governor Yi Gang.

The latter said that China’s central bank will maintain prudent monetary policy and increase support for the economy, speaking at the annual Boao Forum on Asia. He also said that the priority for China’s monetary policy is to ensure stable prices, especially for food and energy.

“The words are nice, but there has to be some action,” Andrew Maynard, chief executive of China Renaissance, told CNBC.

In mainland ChinaShanghai Composite rose 0.37%, while Shenzen lost 0.153%.

In the Hong Kong, the Hang Seng index picked up its losses at 0.25% from 2% it had lost earlier. Shares of Chinese tech giants Tencent and Alibaba are down 1.95% and 1.59%, respectively.

In Japan, the Nikkei 225 leads the losses in Asia, losing 1.63%, as shares of the SoftBank Group plunged 3%. Topix slides by 1.19%.

In South KoreaKospi loses 0.82% lower, while the S & P / ASX 200 at Australia notes losses of 1.57%.

THE wider MSC indexI for shares in the Asia-Pacific region outside Japan is down 0.8%.

Source: Capital