by Laetitia Volga

PARIS (Reuters) – The main European stock markets are expected to fall on Wednesday at the opening, as negotiations on the ceiling of the American debt continue to skate in Washington.

The first indications available point to an opening down 0.43% for the CAC 40 in Paris and the Dax in Frankfurt, 0.4% for the FTSE in London and the EuroStoxx 50.

Congressional Republicans and representatives of Joe Biden’s administration completed a new round of talks on Tuesday on the terms of a debt ceiling hike, with no sign of progress, raising fears of a US default. United, possibly as early as June 1st.

According to news reports, House of Representatives “speaker” Kevin McCarthy said in a closed meeting with Republicans that he was nowhere near a bipartisan deal with Democrats.

“While the likelihood of default is very low, it appears to be significantly higher than in previous debt ceiling freezes due to the current political landscape,” said Jake Jolly of BNY Mellon Investment Management.

“Furthermore, it is unclear what form the deal will take and its impact on the fiscal outlook.”

AT WALL STREET

On Tuesday in New York, the Dow Jones index lost 0.69% to 33,055.51 points, the S&P 500 lost 1.12% to 4,145.58 points and the Nasdaq Composite dropped 1.26% to 12,560.25 points.

In addition to concerns about the US debt, investors were cautious ahead of the minutes of the meeting of the Fed’s monetary policy committee on May 2 and 3, expected at 6:00 p.m. GMT, with potential clues about the intentions of the US central bank.

On the positive side, the May composite PMI “flash” index in the United States stood at its highest level in 13 months, thanks to strong growth in the services sector.

In stocks, semiconductor maker Broadcom gained 1.2% after announcing a multi-billion dollar deal with Apple to use US-produced chips.

Lowe’s fell 1.7% after lowering its full-year like-for-like sales forecast as demand weakens.

IN ASIA

The Nikkei on the Tokyo Stock Exchange lost 0.56%, still on profit taking after a rally that took it to a 33-year peak.

In China, the CSI 300 index fell by 0.33% and the Shanghai SSE Composite by 0.38%.

CHANGES

Against other major currencies, the dollar is stabilizing near the two-month peak recorded the day before. The EUR is virtually unchanged at 1.0778.

The New Zealand dollar (-1.2%), for its part, suffered from the announcements of the RBNZ, the central bank of New Zealand, which indicated to everyone’s surprise that it had finished raising its key rate after the increased to 5.5%, a 14-year high.

RATE

The yield on ten-year US government bonds fell slightly in Asian trading at 3.6843%.

OIL

The oil market is on the rise after the American Petroleum Institute (API) announced a decrease in crude oil and gasoline reserves.

Another supportive factor was the Saudi Energy Minister’s warning against investors betting on lower prices, which is seen as a sign that OPEC+ could opt for a new supply restriction during a meeting on June 4.

Brent gained 1.09% to 77.68 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.25% to 73.82 dollars.

(edited by Bertrand Boucey)

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