European equity markets are expected to rise, in the wake of Wall Street

Eurostoxx 50 stands at 3,926.12 points +1.14%, CAC 40 at 6,659.41 points +1.17%, at DAX 40 14,473.20 points +1.02%, at FTSE 100 7,476.72 points +0 .46% , at SMI 12,202.62 points +0.26% , AEX at 728.27 points +1.38%, BEL 20 at 4,168.85 points +0.95%, IBEX 35 at 8,487.20 points +1 .17%

DJ IA recorded 34,807.46 points +0.74%, Nasdaq 14,108.82 points +1.95%, S&P 500 4,511.61 points +1.13% and Nikkei 225 28,040.16 points +3.00%

Exchange rate at 06:50

Change from the close in New York

EUR/USD trades at 1.1040 +0.09%, EUR/JPY at 133.60 +0.27% and USD/JPY at 121.05 +0.20%

TO FOLLOW IN FRANCE

The energy group TotalEnergies has announced that it will no longer conclude or renew contracts for the purchase of Russian oil and oil products, in order to stop these purchases "as soon as possible and at the latest by the end of the year 2022 ". This decision is relative to the worsening of the situation in Ukraine and the existence of alternative sources to supply Europe.

TotalEnergies also indicated that it would ensure "strict compliance with European sanctions, current and future, whatever the consequences for the management of its assets in Russia" and that it would initiate the "gradual suspension of its activities in Russia, in ensuring the safety of its personnel".

"TotalEnergies denies operating any oil or gas field, let alone a liquefied natural gas (LNG) plant in Russia". The latter is a minority shareholder in various Russian private companies - Novatek (19.4%), Yamal LNG (20%), Arctic LNG 2 (10%), TerNefteGaz (49%) - which are "managed by own personnel with a limited number of detached TotalEnergies". The group is also a partner with 20% of JV Kharyaga operated by Zarubezhneft. "The company has certainly contributed to the construction phase of the projects of these companies but says that it has no activity or operational responsibility on these sites".

The group clarified that it would no longer provide capital for the development of projects in Russia. TotalEnergies has in particular decided to no longer record proven reserves in its accounts for the Arctic LNG2 project and will no longer contribute capital, "given the uncertainties posed by the technological and financial sanctions on the ability to carry out this project. under construction and their probable rise in power in the face of the aggravation of the conflict".

For its part, the veterinary laboratory Virbac confirmed its financial objectives for 2022 after having reached its profitability forecast in 2021.

SHARES

European equity markets are expected to open higher on Wednesday, in the wake of Wall Street's gains the day before. Nevertheless, investors remain concerned about the war in Ukraine and inflation.

Around 7:30 a.m., the CAC 40 futures contract gained 52 points, or 0.8%, according to data from broker IG Markets. The contract on the DAX 40 gained 107 points, or 0.7%, and that on the FTSE 100 rose by 43 points, or 0.6%.

Ukrainian President Volodymyr Zelensky is due to deliver a highly anticipated speech to the Japanese parliament. Japan, which adopted a pacifist constitution after its defeat in World War II, has taken an unusual stance on the war in Ukraine, joining sanctions against Russia alongside Western countries.

Investors are also awaiting the visit of the President of the United States, Joe Biden, to Brussels where he will meet the leaders of NATO and those of the European Union on Thursday. Sanctions and the embargo on Russian oil should be on the agenda of the European Council.

Operators will also watch the words of the Chairman of the Federal Reserve, who will speak on Wednesday at a conference organized by the Bank for International Settlements (BIS). Jerome Powell will speak in a panel that will also include Bank of England Governor Andrew Bailey, BIS Chief Executive Agustin Carstens, Bundesbank President Joachim Nagel, and Malaysian Central Bank Governor Nor Shamsiah Mohd Yunus .

In addition, the United States and the United Kingdom have reached a trade agreement which will eliminate American tariffs on British steel and aluminum, while the United Kingdom will lift taxes on whiskey, motorcycles and American tobacco.

US officials have said the deal with London would allow the UK to deliver " sustainable volumes" of steel and aluminum to the United States, without the taxes imposed by the former Trump administration.

Wall Street closed higher Tuesday without being hampered by the prospect of a more restrictive monetary policy, which is reflected however in the bond market. The Dow Jones Index ( DJ IA) gained 0.7% on Tuesday to 34,807.46 points, and the broader S&P 500 index ended up 0.6% to 4,511.61 points. The tech-dominated Nasdaq Composite gained 2% to 14,108.82 points.

In the wake of US indices, Asian stock markets rose on Wednesday. The Nikkei index ended up 3% in Tokyo. At the end of the session, the Hang Seng was already up 1.7% in Hong Kong and the Shanghai Composite gained 0.3%.

OBLIGATIONS

Yields on US Treasury bonds rose sharply on Tuesday for the second consecutive session, reflecting expectations of accelerated monetary tightening in the United States to fight inflation. The yield on the ten-year Treasury note, the market benchmark, continued to rise Wednesday morning , standing at 2.403%, compared to 2.385% on Tuesday evening and 2.30% on Monday evening.

According to Deutsche Bank, the rapid rise in bond yields and the flattening of the yield curve across the Atlantic point to a recession at the end of the Fed's monetary policy tightening cycle. "With inflation at its highest levels in decades, the Fed will need to undertake dramatic tightening to bring it back to its 2% target," the bank said.

A soft landing will only be possible if the production of goods and the supply of jobs increase, slowing inflation, if fiscal spending declines, or if the Fed tolerates long periods of above-target inflation. , adds Deutsche Bank. "The hope lies in the fact that the economy is starting from very high [...] but the increases [des rates] will be rapid and marked, a pernicious recipe for future growth", adds the bank.

CHANGES

The dollar fell slightly against the euro on Wednesday morning but appreciated against the yen. According to Capital Economics, the war in Ukraine is expected to have a negative effect of 0.5 percentage points on global economic growth this year. The financial intermediary anticipates a rise in bond yields and the dollar for 2022, as well as reduced gains for equities.

“We expect yields on long-dated government bonds to rise further in most major economies, and especially in the United States where we expect a particularly sharp tightening of monetary policy from the Federal Reserve,” said Capital Economics, adding that rate differentials should thus continue to evolve in favor of the greenback.

OIL

Oil prices recovered on Wednesday, after losing ground the day before.

It now seems unlikely that the European Union (EU) will join the United States in imposing an embargo on Russian oil in response to the invasion of Ukraine, underlines Phillip Securities. Some EU member states, including Germany, have indicated that the 27 were too dependent on Russian hydrocarbons to support such a measure, adds the financial intermediary.

However, the number of companies announcing the end of their activities in Russia continues to grow, says ANZ, citing TotalEnergies, the latest to have decided not to buy Russian oil and oil products.

Around 7:20 a.m., the May contract on Brent North Sea crude gained 38 cents, at 115.86 dollars a barrel, while that of the same expiry on light sweet crude (WTI) quoted on the Nymex took 32 cents, at 109, $59 a barrel.