Market: Equities lag behind the risk of a return of inflation

by Marc Angrand

PARIS (Reuters) – The main European stock markets gave ground at the start of the session on Wednesday, speculation about a possible return of inflation tempering confidence in the economic recovery which had raised them the day before to their highest level for a year.

In Paris, the CAC 40 lost 0.06% to 5,783.36 points at 09:00 GMT. In London, the FTSE 100 fell 0.23% and in Frankfurt, the Dax dropped 0.26%.

The EuroStoxx 50 index is down 0.07%, the FTSEurofirst 300 0.25% and the Stoxx 600 0.2%.

The latter had finished Tuesday at the highest since February 24 of last year.

The figures slightly higher than expectations for inflation in the United Kingdom in January (+ 0.7% over one year) have fueled the debate on the risk of an inflationary surge likely to force central banks to tighten their monetary policy earlier than anticipated so far.

Until now, this hypothesis has mainly resulted in the rise in bond yields, in the United States and to a lesser extent in Europe, but which is gradually gaining ground in the equity markets.

In this context, investors will carefully study the minutes of the last meeting of the US Federal Reserve expected at 19:00 GMT.

VALUES

Most of the major European sector indices are moving in negative territory, the only exceptions being for the oil and gas sector (+ 1.19%), which benefits from the good performance of crude prices, and for banks (+ 0.37%), benefited by the rise in bond yields.

In contrast, the distribution compartment (-2.59%) is penalized by the fall of 5.5% of Zalando, whose investment group Kinnevik plans to distribute its 21% stake to its own shareholders, and by that of 7.18% of Kering in reaction to an unexpected drop in sales in the fourth quarter.

On the contrary, other stocks benefit from their results, such as the Dutch Akzo Nobel, which takes 0.4% or the French M6 (+ 9.17%).

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index ended the day down 0.58%, yielding to profit taking after the high of more than 30 years recorded the day before. Among other things, the movement affected the values ​​of semiconductors.

Chinese markets remain closed and will reopen on Thursday after a closing week for the Lunar New Year.

A WALL STREET

Futures on major US indices for now suggest an open close to equilibrium but the trend could be influenced by the US retail sales figures in January, expected at 13:30 GMT.

On Tuesday, the New York Stock Exchange ended in scattered order Tuesday with a closing record for the Dow Jones, driven by hopes of massive measures to support the US economy, but pullbacks for the S&P 500 and the Nasdaq, penalized by concerns reflected by the rise in rates.

The Dow Jones gained 62.17 points, or 0.20%, to 31,522.75, the Standard & Poor’s 500 lost 2.26 points, or 0.06%, to 3,932.59 and the Nasdaq Composite lost 47 , 98 points (-0.34%) to 14,047.50 points.

RATE

Yields on benchmark government bonds in the area euro remain close to the recent highs of the last few days: that of the ten-year German Bund is at -0.353% after having hit, at -0.331%, its highest level since last June and its French equivalent, at -0, 1251%, was -0.098%, its highest since September 1.

The ten-year American, for its part, lost 1.7 basis points to 1.2821% after registering a one-year peak at 1.333%.

CHANGES

In the currency market, the dollar continues to benefit from the rise in US bond yields and inflation expectations: it hit a five-month high against the yen and theeuro fell back below $ 1.21 (-0.22%).

OIL

After a hesitant start to the day, the oil market started to rise again, taking advantage of the cold wave that hit part of the United States, including Texas, the country’s leading producer state.

Brent gained 0.95% to 63.95 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.72% to 60.48 dollars.

(edited by Patrick Vignal)

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