Equity markets recovered slightly for the first session of the second half after a very poor record in the first six months, a move accompanied by a significant drop in interest rates in the bond market.
After a sharp drop in the opening, European stock exchanges changed color. Paris was up 0.63%, Frankfurt 0.67% and London 0.48% around 14:00 GMT. After the worst half in 50 years for the broader index, the S&P 500, Wall Street was rising in early trade; The S&P 500 gained 0.41%, the Dow Jones gained 0.26% and the Nasdaq gained 0.55%. On the contrary, interest rates on government loans in the bond market weakened sharply. The US 10-year yield fell below 3% (-18 basis points to 2.83%), the lowest since early June.
The trend is similar in Europe, with German credit at the same maturity down eleven basis points to 1.22%. Investors may have been somewhat reassured by the European Central Bank’s desire to ensure that bond yield spreads between eurozone countries do not widen too much. Restore “fragmentationin the euro area, i.e. differences (“spreads“) between sovereign borrowing rates, it also benefits less risky countries like Germany, Fabio Panetta, a member of the European Central Bank’s executive board, said on Friday. The institution also has a lot to do to control price increases in the economy, after inflation accelerated in June to a new record of 8.6% over the year.
But core inflation, excluding the more volatile commodity and food pricesfell slightly to 3.7%, a nice surprise as it was expected to risenotes Oanda analyst Craig Erlam. However, that will not be enough to keep the ECB from raising its key interest rates in July and at other meetings before the end of the year, according to statements by its president Christine Lagarde in recent weeks. Investors fear that this tightening will lead to a sharp slowdown in economic growth, possibly leading to a recession. In this context, they are more likely to go to government bonds, where the yield, which has risen significantly since the beginning of the year, is now more attractive.
Warranty for Uniper
German Finance Minister Christian Lindner said at a press conference that the German state can help Uniper energy group in the form of credit guarantees. Shares in Uniper, which fell sharply on Thursday after suspending forecasts for 2022 and the group’s struggles with Gazprom’s cut in gas supplies to Germany, returned 11.50%, while its home Finnish parent Fortum is at 6.15. %: In France, EDF rose 8.74%, while Danish power producer Orsted rose more than 6%.
On the oil and currencies side
Oil prices were rising again, supported by output cuts in Libya and Ecuador, despite OPEC+’s marginal increase in output in August. Brent North Sea crude for September delivery, the first day of use as the benchmark contract, was up 2.20% at $111.43 by 1:30pm GMT. The price of American West Texas Intermediate (WTI) oil for August increased by 2.31 percent, reaching $108.20. The dollar, a safe haven for money markets, rose 1.37% against the pound to trade at £0.8327.
The exchange rate of the euro decreased by 0.71%, reaching 1.0409 dollars.
Bitcoin rose 4.38% to $19,550 after briefly breaking above the $20,000 mark. June was the worst month in the history of cryptocurrencies, with a drop of more than 40%.
Source: Le Figaro
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