European stock markets are expected to decline after the second round of legislative elections in France. The Eurostoxx 50 opens at 3,438.46 points (+0.31%), the CAC 40 at 5,882.65 points (-0.06%), the DAX 40 at 13,126.26 points (+0.67%), the FTSE 100 at 7,016.25 points (-0.41%), the SMI at 10,451.31 points (-0.23%), the AEX at 635.75 points (-0,41%), the SMI at 10,451.31 points (-0.23%), the AEX at 635.75 points (-0.41%), the BEL 20 at 3,714.34 points (+1.74%), the IBEX 35 at 8,145.90 points (+0.84%), the DJIA at 29,888.78 points (-0.13%) and the Nikkei 225 at 25,637.12 points (-1.26%).

As for exchange rates, the change compared to the close in New York indicates that EUR/USD at 1.0527 (+0.29%), EUR/JPY at 142.04 (+0.30%) and USD/JPY at 134.94 (-0.02%).

Investors will react to the results of the second round of the parliamentary elections on Monday, which saw President Emmanuel Macron's party lose its absolute majority in the National Assembly. With 245 seats, the Ensemble party obtained the largest number of seats in the hemicycle but will not be able to govern alone, the absolute majority being 289 seats. The leftist coalition Nupes won 137 parliamentary seats and the National Rally 89. The latter achieved a historic breakthrough in Parliament and ended up with more deputies than LR, which has 64 seats.

European equity markets are expected to open lower on Monday, as investors continue to assess the risks of a slowdown in growth and react to the outcome of legislative elections in France. As US markets are closed due to a holiday on Monday, volumes are expected to be smaller than usual. At 7:35am, the CAC 40 futures contract lost 34 points, or 0.6%, according to data from the IG Markets broker, reflecting investor concerns about the composition of the new National Assembly. The DAX 40 contract fell 22 points, or 0.2%, and the FTSE 100 contract fell 10 points, or 0.2%.

In Asia, markets fell on Monday. At the end of the session, the Nikkei index lost 1.2% in Tokyo, penalized by fears for growth in the face of the restrictive position of central banks. The Hong Kong Stock Exchange's Hang Seng and the Shanghai Composite lost 0.1% each. On Friday night, Wall Street closed without direction after a volatile session, unable to find support in the rebound in technology stocks. Last week, the S&P 500 and Dow Jones Indices (DJIA) saw their biggest weekly decline since March and October 2020 respectively, due to recession fears. The Dow Jones Index (DJIA) lost 0.1% on Friday, to 29,888.78 points. The S&P 500 gained 0.2% to 3,674.84 points. The Nasdaq Composite, rich in technology stocks, rose by 1.1% to 10,798.35 points.

Nervous investors flocked to ten-, 20- and 30-year US Treasury bonds on Friday, whose yields have fallen much more than other maturities. The yield gap between two- and ten-year bonds has narrowed, nearing reversal. It fell below 6 basis points, which bodes ill for the economic outlook. The yield gap between five-year and 30-year securities remained reversed, at -5.6 basis points.

The euro is gaining ground against the dollar on Monday morning, ahead of speeches from numerous central bankers expected this week, including ECB President Christine Lagarde and her Fed counterpart Jerome Powell.
A more restrictive ECB could support the euro, but Bank of America remains cautious. Moreover, markets seem to be alternating recently between appeasement after the words of Fed officials, who affirmed that it would do what was necessary to curb inflation, and panic when they consider the economic consequences of the monetary tightening, notes ING. The week should therefore once again be marked by high volatility, according to the bank.

Oil futures changed little on Monday as investors continued to assess the risks of an economic recession and changes in demand.
Prolonged lockdowns in China are the main driver of fears about demand, Saxo Bank strategists note. “In addition, the short-term technical outlook has deteriorated after several failed attempts to raise prices. “According to UOB analysts, “in the commodity sector, prices will continue to rise and Brent is expected to approach psychological resilience at $130 per barrel amid supply disruptions and falling inventories.
At 7:25am, the August North Sea Brent contract was earning 13 cents at $113.25 a barrel. The July contract for light sweet crude (WTI) listed on Nymex was worth 4 cents at $109.60 per barrel.