Pandemic concerns should cause equity markets to bend 

Eurostoxx 50 3,545.74 points -0.42% 
CAC 40 5,527.84 points -0.39% 
DAX 30 13,630.51 points -0.27% 
FTSE 100 6,529.18 points -0.33% 
SMI 10,523.86 points -0.16% 
AEX 625.25 points +0.08% 
BEL 20 3,657.33 points -0.54% 
IBEX 35 8,037.40 points -1.42% 
 
DJIA 30,179.05 points -0.41% 
Nasdaq 12,755.64 points -0.07% 
S&P 500 3,709.41 points -0.35% 
 
Nikkei 225 26,714.42 points -0.18% 
 
Exchange rate at 06:50 
Change from closing in New York 
 
EUR/USD 1.2188 -0.57% 
EUR/JPY 126.09 -0.44% 
USD/JPY 103.46 +0.13% 
 

TO FOLLOW IN FRANCE

Shopping centre operator Unibail-Rodamco-Westfield (URW) announced on Monday that it had concluded several agreements with French institutional investors for the sale of office buildings located in the Paris business district of La Défense, for a net amount of 213 million euros.

The amount of this transaction, which is expected to occur in the first quarter of next year, is higher than the last book value of these assets, the group said in a statement.

On the agenda of companies, Manitou meets Monday its shareholders in general meeting, while Graines Voltz publishes its quarterly turnover.

No major macroeconomic indicators are due to be released on Monday in France.

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European equity markets are expected to open in negative territory on Monday, as the worsening Covid-19 pandemic overshadows the agreement reached by US congressional negotiators on a new plan to support the economy.

At 7:45 a.m., the CAC 40 futures contract lost 70.9 points, or 1.3%, according to data from broker IG Markets. The CONTRACT on the DAX 30 was down 176.3 points, or 1.3%, and the FTSE 100 contract was down 71.1 points, or 1.1%.

In the UK, the spread of a particularly contagious strain of Covid-19 has led to new restrictions for businesses and other activities.

The  UK government has imposed a new lockdown in the affected areas, including the closure of all non-essential businesses, and has abandoned plans to allow a five-day truce for Covid-19 restrictions across the country during the Christmas period, which would have allowed the meetings of three homes.

Several countries in Europe and elsewhere decided on Sunday to ban access to travelers from British soil, in order to prevent the spread of this new strain of the coronavirus.

Meanwhile, trade talks between the UK and the European Union stalled over the weekend, with little time left for both sides to approve a post-Brexit trade deal before December 31.

In the United States, Democratic and Republican negotiators reached an agreement on Sunday on a plan to support the economy of about $ 900 billion, after months of deadlock.

This plan includes a $600 direct payment to many Americans, a federal unemployment benefit of $300 a week, and help for schools, vaccine distribution, and small businesses.

Negotiators were finalizing the other measures in the plan on Sunday, after settling their disagreement over the Federal Reserve's power to grant emergency loans. Republican Senate Majority Leader Mitch McConnell said Sunday afternoon that all outstanding issues had been resolved. "We have finally reached the bipartisan agreement that the country needs," he said. "We must now quickly finalize the text, avoid last-minute obstacles and get this law passed by both chambers."

Congress on Sunday night extended federal funding by 24 hours, which will allow lawmakers to vote on Monday on both the support plan and a new annual budget bill worth about $1.4 trillion. Congress had passed exceptional spending measures in recent days to ensure that the state continued to be funded while it completed negotiations on the stimulus package.

The New York Stock Exchange ended lower on Friday, pausing after all-time highs hit the day before as negotiations on the stimulus package continued in Congress.

On the week, the Dow Jones Index and the S&P 500 Index gained 0.5% and 1.3% respectively while the Nasdaq Index gained 2.5%.

In Asia, equity markets posted a mixed performance on Monday. In Tokyo, the Nikkei index closed down 0.2% and the Hang Seng of the Hong Kong Stock Exchange lost 0.3% at the end of the session. The Shanghai Composite, on the other hand, was up 0.6%.

Obligations

The yield on the U.S. 10-year bond fell Monday morning as Republican and Democratic leaders announced Sunday that they had reached an agreement on a $900 billion stimulus package. The rate on the 10-year bond stood at 0.926%, compared with 0.946% on Friday night.

Bonds of peripheral euro area countries have room to continue to outperform those of countries in the hard core of the monetary union, and all spreads are expected to close in the first half of 2021, said Florian Spaete, bond strategist at Generali Investments.

A moderate increase in spreads seems possible in the second half of the year, as the improved economic environment could prompt calls for a reduction in support from the European Central Bank (ECB). However, it is unlikely that this increase in spreads will erase the outperformance of the bonds of the peripheral countries of the euro zone, says Florian Spaete.

A gradual rise in inflation rates in the euro area could lead to a slight rise in government bond yields in 2021, even if the ECB's bond purchases maintain a negative net supply, the strategist believes.

Once the economic recovery due to the deployments of vaccines against Covid-19 has settled from spring 2021, "it will result in an increase in yields", says Florian Spaete.

FOREIGN EXCHANGE

The euro fell sharply on Monday morning against the dollar and the yen, while the greenback appreciated against the Japanese currency.

The pound lost 1.2%, to 1.3364 dollars, and the euro gained 0.7%, to 0.9129 pounds, while the discovery of a new, more contagious strain of the coronavirus and the persistent uncertainties over Brexit are a double blow to the British currency, analysts say.

Goldman Sachs lowered its forecast for the dollar because the bank believes that the global economic recovery will reduce the attractiveness of the greenback. Goldman Sachs also takes into account the Fed's rate cuts and the new strategy of the  US central bank , based on an average inflation target of 2%, which is expected to keep interest rates low for several years. Goldman Sachs raised its forecast for the euro-dollar to 1.28, instead of a target of 1.25 published in July.

Oil

Oil prices  Are  falling on Monday amid weak short-term fundamentals, according to TA Securities.

The broker notes, however, that the decline in oil prices is mitigated by optimism about the deployment of vaccines, which suggests an economic recovery.

TA believes that oil market fundamentals will recover sooner than expected, and that the potential economic recovery will revive demand for crude oil and natural gas , including its derivatives.

Around 7:30 a.m., the February contract for North Sea Brent lost $1.50 to $50.76 a barrel, while the January contract for light sweet crude (WTI) listed on the Nymex fell $1.38 to $47.86 a barrel.