(Paris) Western stock markets remained cautious on Tuesday, after the fall of Chinese markets faced with new confinements in China and while talks between Ukraine and Russia are expected.
In Europe, the indices were moving down after losing up to 2.5% in the morning. Around 7:45 a.m., Paris lost 1.31%, Frankfurt 1.26% and Milan 0.91%. London fell by 0.90%, despite a sharp decline in the unemployment rate in the United Kingdom.
On Wall Street, the NASDAQ technology index is expected to rebound slightly by 0.16%, after falling more than 2% the day before. The Dow Jones and S&P 500 are expected to remain flat at the open, according to their futures.
Undermined by a sharp drop in shares of the technology sector, the Hong Kong Stock Exchange plunged by 5.72% and that of Shanghai by 4.95%.
Faced with a record number of daily COVID-19 cases in China, authorities locked down several cities and regions, including the tech capital Shenzhen, shutting down many factories like those of Apple’s supplier, electronics maker Foxconn.
This situation “darkens China’s growth prospects”, underlines Christian Parisot for the broker Aurel BGC. In early March, the country set itself a growth target of “around 5.5%” in 2022.
Fears of an economic slowdown spread to the crude oil market: around 7:40 a.m., the benchmark price of a barrel in the United States, WTI, fell by 8.28% to 94.38 dollars and that of Brent by the North Sea for delivery in May dropped 7.05% to 99.36 dollars. Both are back below $100, a week after reaching their highest level since 2008 due to Russia’s invasion of Ukraine.
“The new containment measures will continue to aggravate supply chain disruptions and add to inflation concerns” globally, said Ipek Ozkardeskaya, analyst at SwissQuote.
The markets also remain suspended on the talks between Ukraine and Russia and hope in each session that a ceasefire is negotiated.
A new round of discussions is scheduled for Tuesday, as Russian strikes increase in Kyiv itself and the Russian army expands its offensive across the country, on 20and day of his invasion of Ukraine.
The UK has imposed new trade sanctions against Russia.
“The prospect of economic sanctions from the West (against China) raised by the possibility of military support for Russia” also weighed on market sentiment, said Pierre Veyret, analyst at ActivTrades.
The war in Ukraine took a heavy toll on German investor sentiment, which fell to a record low in March.
The markets are also impatiently awaiting the conclusions of the monetary policy meeting of the American central bank (Federal Reserve, Fed), which begins on Tuesday.
The Fed is expected to raise its key rate by a quarter of a point and “it will certainly not be the last (rise) as market activity suggests six to seven more rate hikes for the next twelve months in the United States” , notes Ipek Ozkardeskaya.
From this perspective, bond rates rose sharply on Monday. On Tuesday, they were flat, with the yield on US 10-year debt standing at 2.13% around 7:40 a.m., the highest since July 2019.
The luxury touched
As China is one of the main markets for luxury companies, the authorities’ containment measures raise fears of a drop in revenues for the sector.
In Paris, Kering lost 2.82% and Hermès 2.48%. In Zurich, Richemont dropped 2.23% and Swatch 2.83%. In Milan, Tod’s yielded 3.67%, Salvatore Ferragamo 3.87%.
The European Union, for its part, announced on Friday that it would ban exports of luxury goods to Russia.
The title of the operator of Frankfurt airport fell by 5.01%, after forecasts deemed disappointing for the current financial year.
On the side of the euro and bitcoin
Around 7:35 a.m., the euro was trading at $1.0986, up 0.42% from the previous day’s close.
Bitcoin was stable at $38,710.