Increase in sight in Europe, but concerns do not change

PARIS (Reuters) – Major European stock markets are expected to rise on Wednesday after a slightly better-than-expected Chinese indicator, but this first session in June, like the previous one, should be driven by questions about the slowdown in economic growth and the impact of inflation on the monetary policy of the major central banks.

Futures contracts on indices suggest an increase of 0.34% for the CAC 40 Paris, 0.39% for the Dax Frankfurt, 0.38% for the FTSE 100 London and 0.34% for the EuroStoxx 50.

European stock markets ended in the red on Tuesday after a session marked by both the new euro-zone inflation record (8.1% year on year) and the European agreement to cut Russian oil imports, which is likely to lead to further rise in the price of a barrel. May thus ended with a 1.56% decline for the broad Stoxx 600 index and 0.99% for the CAC 40.

In Asia, the Caixin-S&P Global PMI index for Chinese manufacturing activity rose to 48.1 in May, from 46.0 in April, while the Reuters consensus gave it 48.0, reflecting a less pronounced contraction . to a “normal” life after two months of incarceration.

In Europe, final data from manufacturing PMI indices expected tomorrow morning should confirm a slowdown in growth, ongoing supply chain tensions and the trend of continued price increases.

The latter continues to weigh on household consumption: in Germany, retail sales fell 5.4% in April, while economists polled by Reuters had forecast a limited decline of 0.2%.

Markets will also look to the results of the ISM survey on manufacturing activity in the United States and ADP’s private employment survey, a prelude to the Labor Department’s monthly report expected Friday.

They will also study the monetary policy statement from the Bank of Canada, which should announce a further hike in its key rate by half a point to 1.5%.

“Markets are anticipating rate hikes for June in the United Kingdom, United States, Sweden, Australia and Canada,” said Kit Juckes, an analyst at Socit Generale. “The more markets focus on inflation numbers and central bank decisions, the more likely the early summer will be action-packed in terms of risk appetite and dollar bullishness.”

AT WALL STREET

The New York Stock Exchange ended lower on Tuesday after an indecisive session marked by oil price swings and market reaction to statements from a Federal Reserve official suggesting monetary policy tightening in the United States would last longer than expected.

The Dow Jones index lost 0.67% or 222.84 points to 32,990.12, the Standard & Poor’s 500 lost 26.09 points (-0.63%) to 4,132.15 and the Nasdaq Composite fell 49.74 points (-0.41%) 12,081.39.

After last week’s rally ended a long string of weekly declines, the S&P-500 and Dow closed May with small gains, while the Nasdaq posted a 2.05% monthly decline.

Futures contracts point to a slightly higher open for now.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index ended 0.65%, driven by the automotive sector after a JPMorgan study predicted record year-on-year profits for major Japanese manufacturers: Toyota took 3.53%, Nissan 7.77% and Honda took 4. 3%.

In China, the Shanghai SSE Composite lost 0.35% and the CSI 300 lost 0.42%, while in Hong Kong the Hang Seng fell 0.84%, led by technology stocks (-1.99%).

EXCHANGE/RATES

June started well for the dollar, which appreciated 0.24% against a benchmark basket, reaching its highest level since May 18 against the yen (+0.40%) at 129.28.

The euro, meanwhile, fell 0.21% against the greenback at 1.071, continuing the decline that began after a month-long high of 1.0787 on Monday.

The US currency continues to benefit from the rise in Treasury yields: The two-year, which is particularly sensitive to expectations of changes in key interest rates, gained almost eight basis points on Tuesday, pushing the decline for the whole of May by 18.4 points. was limited. † IT appears 2,5626% in foreign exchange in Asia.

In Europe, the German two-year is almost stable in the first exchanges at 0.502%, while the ten-year is down 1.108%.

PETROLEUM

The oil market has risen slightly, still bolstered by the prospect of an almost complete cessation of Russian crude imports from the European Union and towards the end of the lockdown in Shanghai.

Brent gained 0.48% to $116.15 a barrel and US light crude (West Texas Intermediate, WTI) 0.51% to $115.25.

However, the rise is limited by information from the Wall Street Journal that several Organization of the Petroleum Exporting Countries (OPEC) member states are considering suspending Russia from collective supply management agreements, which could encourage some countries to increase production.

(Written by Marc Angrand, with Tom Westbrook Singapore, spoken by Kate Entringer)

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