Wall Street expected to be in the red, China concerned
EUROPÄISCHE BÖRSE hesitates in the middle of the session
by Laetitia Volga
PARIS (Reuters) – Wall Street is expected to fall and European stock markets hesitated during Monday’s session after a raft of Chinese economic indicators came in below expectations.
Futures signals a decline of 0.5% for the Dow Jones, 0.44% for the Standard & Poor’s 500 and 0.24% for the Nasdaq.
In Paris, the CAC 40 was up 0.2% to 6,567.14 as of 10:55 GMT. In Frankfurt, the Dax snapped up 0.08% and in London, the FTSE lost 0.1%.
The pan-European FTSEurofirst 300 index rose 0.21%, the Eurozone EuroStoxx 50 rose 0.18% and the Stoxx 600 rose 0.25%.
China’s July industrial production and retail sales figures released on Monday came in below market expectations, highlighting the impact of COVID-19 outbreak restrictions on the world’s second largest economy.
The People’s Bank of China unexpectedly cut interest rates to support growth.
“Initially it’s seen as a stimulus, but when you cut rates it can also be seen as an admission that your economy needs help,” said David Madden of Equiti Capital.
ING cut its growth estimate for China’s economy to 4% from a previous 4.4% and warned that a further downgrade of its forecast was possible depending on the impact of inflation on exports, health restrictions and rising unemployment in mainland China.
For investors, one of the key economic events of the week on Wednesday will be the release of US retail sales and minutes of the Federal Reserve’s last meeting.
VALUES IN EUROPE
Amid concerns about Chinese economic growth, the auto and commodity sectors, which are heavily dependent on China, fell 0.56% and 1.33%, respectively.
Oil stocks suffer from the fall in crude oil prices for the second straight month, with TotalEnergies down 1.64% and Shell down 2.08%. The industry lost 1.4% overall.
Higher, HelloFresh climbs 5.33% after confirming its medium-term targets and saying it is “cautiously optimistic” for the second half despite inflation and a slowing economy, and Henkel climbs 0.93% after raising its annual sales growth target Has.
Pharmaceutical giant AstraZeneca gained 2.78% after announcing that a study has confirmed the benefits of the drug Enhertu, developed with Japanese Daiichi Sankyo, in patients with an advanced form of breast cancer who have previously been treated with another treatment.
Oil prices fell sharply, punished by a potential increase in production from Saudi Aramco, as mentioned by the oil giant’s CEO, and concerns about signs of a slowdown in China’s economy.
The market is also expecting Iran’s response by midnight to the European Union’s proposal to resume talks to save the 2015 nuclear deal, which could boost global supply.
Brent fell 4.66% to $93.58 a barrel and American light oil (West Texas Intermediate, WTI) fell 4.82% to $87.65.
In the FX market, weaker-than-expected economic indicators are fueling recession fears, benefiting the dollar, which is up 0.6% against a basket of benchmarks
The euro fell to $1.0201, close to the previous week’s low of 1.0185.
Concerns about China, but also about Germany’s gas supply, favor government bonds in Europe. The 10-year Bund yield fell almost four basis points to 0.955%.
In the United States, the 10-year bond fell two points to 2.8276%.
(Written by Laetitia Volga, Editing by Kate Entringer)