by Laetitia Volga

PARIS (Reuters) – Caution should once again limit the spreads of the main European stock markets on Tuesday at the opening, pending progress in Washington in the negotiations on the raising of the American debt ceiling.

Index futures suggest a drop of 0.03% for the Paris CAC 40, 0.17% for the Dax in Frankfurt, 0.12% for the FTSE in London and 0.14% for the Euro Stoxx 50.

US President Joe Biden and House of Representatives speaker Kevin McCarthy had a “productive” meeting on Monday but still failed to reach an agreement on raising the US debt ceiling.

The Treasury has warned that in just over a week, on June 1, the United States could find itself in default without raising this ceiling, a situation that could cause a global storm in financial markets.

In Europe, the morning will be punctuated by the publication of the first results of the PMI surveys of purchasing managers, which could show a slight improvement in the manufacturing sector.

AT WALL STREET

On Monday on the New York Stock Exchange, the Dow Jones index lost 0.42% to 33,286.58 points, the S&P-500 nibbled 0.02% to 4,192.63 points and the Nasdaq advanced 0.50% to 12,720.78 points.

Beijing’s decision, announced on Sunday, to ban Micron Technology’s memory chips in the main Chinese industrial sectors weighed on the trend by raising fears of a new episode in the trade war between China and the United States.

Micron lost 2.85%, dragging other semiconductor giants like Qualcomm (-0.55%) and Broadcom (-0.57%) in its wake.

Apple dropped 0.51% after a lowering of recommendation by Loop Capital while, among the other digital giants, Alphabet (+1.87%) or Meta Platforms (+1.1%) on the other hand progressed.

Chevron dropped 1.8% as the oil major announced plans to acquire PDC Energy (+7.2%) in a $7.6 billion deal.

IN ASIA

After registering a new high of 33 years and chaining eight positive sessions, the Nikkei index lost 0.42% in Tokyo.

In China, the slowing of the country’s economic recovery, the weakening of the yuan and geopolitical tensions are affecting market sentiment: the CSI 300 index lost 0.77% and the Shanghai SSE Composite 0.92%.

EXCHANGES/RATES

The dollar is stable against a basket of major currencies (-0.03%) after hitting a six-month high against the yen.

Among the many Fed heavyweights who spoke on Monday, some suggested the central bank still had room for improvement on monetary tightening.

Minneapolis Fed Chairman Neel Kashkari has estimated that US rates – currently between 5% and 5.25% – may need to go above 6% for inflation to return to target while his St. Louis Fed counterpart James Bullard said an additional 50 basis point increase this year may be needed.

On the bond market, the yield on ten-year Treasury bills is unchanged at 3.721%. The ten-year German is displayed at 2.459% in the first exchanges.

OIL

The oil market remains well oriented thanks to the increase in demand for gasoline in the United States and the reduction in supply from OPEC+.

Brent rose 0.33% to 76.24 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.36% to 72.31 dollars.

(edited by Tangi Salaün and Kate Entringer)

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