European equity markets expected to decline slightly, penalized by the Fed and the war in Ukraine. The Eurostoxx 50 opens at 3,881.80 points (-0.53%), the CAC 40 at 6,582.33 points (-0.57%), the DAX 40 at 14,326.97 points (-0.60% ), the FTSE 100 at 7,442.39 points (+0.51%), the SMI at 12,171.28 points (-0.11%), the AEX at 718.37 points (+0.28%), the BEL 20 at 4,129.55 points (-0.43%), IBEX 35 at 8,389.20 points (-0.34%), DJIA at 34,552.99 points (-0.58%), Nasdaq at 13,838.46 points (-0.40%), the S&P 500 at 4,461.18 points (-0.04%) and the Nikkei 225 at 27,224.11 points (+1.48%).
Regarding exchange rates, the change from the close in New York indicates that EUR/USD opens at 1.0987 (-0.27%), EUR/JPY at 132.23 (+0.47%) and USD/JPY at 120.36 (+0.73%).
Air Liquide presents its new strategic plan on Tuesday, while Virbac publishes its annual results. On Monday evening, the financial rating agency S&P Global Ratings lowered the outlook for the “B” rating of the large retail group Casino from “stable” to “negative”. S&P explains that it made this decision when Casino reported results below its expectations for the 2021 financial year, in particular in terms of its operating cash flow. “Weaker than expected operating momentum and the lack of capital gains from divestments in 2021 have reduced the group's room for maneuver in terms of ratings, and we anticipate increased pressure if performance does not recover and if divestments significant assets do not come into play in 2022," S&P added.
European equity markets are expected to open slightly lower on Tuesday, hurt by comments from Federal Reserve (Fed) Chairman Jerome Powell, news on Ukraine and rising energy prices. At 7:35 a.m., the CAC 40 futures contract lost 20 points, or 0.3%, according to data from broker IG Markets. The contract on the DAX 40 yielded 43 points, or 0.3% also, and that on the FTSE 100 fell by 2 points, or 0.03%.
Wall Street closed slightly lower on Monday. The Dow Jones Index (DJIA) lost 0.6% to 34,552.99 points, and the S&P 500 ended almost unchanged at 4,461.18 points. The Nasdaq Composite dropped 0.4% to 13,838.46 points. In addition, the war in Ukraine and Western sanctions against Russia heighten concerns about Europe's energy supply, inflation and economic recovery from the health crisis. Support for a Russian oil embargo is growing within the EU, diplomats involved in the talks told The Wall Street Journal. This is a significant reversal in the position of the Twenty-Seven with regard to Russia. The Nikkei index ended up 1.5% in Tokyo. At the end of the session, the Hang Seng gained 2.1% in Hong Kong and the Shanghai Composite gained 0.1%.
Yields on US Treasury bonds rose on Monday, buoyed by restrictive rhetoric from US central bankers. This rise continues Tuesday morning. After finishing at 2.294% on Monday evening, the yield on the ten-year Treasury bond, the market benchmark, stands at 2.330%.
The euro retreated Tuesday morning against the dollar and could continue to fall this week if the leading economic indicators published in the euro zone signal a deterioration in the outlook due to the conflict in Ukraine, indicates Unicredit Research. Eurozone Purchasing Managers Indices (PMI) and Germany's IFO Business Climate Index could weigh on the euro as they signal a deterioration in confidence due to the war, UniCredit analysts add .
Oil futures continue to rise on Tuesday as support for a Russian oil embargo grows in the European Union. Attacks by Houthi rebels on Saudi-owned Aramco oil facilities over the weekend also prompted the price hike, Oanda said. The evolution of oil prices depends on geopolitical news and "at present, the risks seem to be increasing, which could push up crude prices", adds Oanda. At 7:25 a.m., the May contract on Brent North Sea crude gained $3.38, or 2.9%, at $119 a barrel, while that of the same expiry on light sweet crude (WTI) listed on the Nymex took $2.98, or 2.7%, to $112.97 a barrel.