by Laetitia Volga

PARIS (Reuters) – Major European stock markets are expected to open around breakeven on Tuesday, on questions about the dynamics of the U.S. economy after a disappointing indicator outweighed the possibility of a dovish Federal Reserve during its next meeting.

The first indications available suggest a decline of 0.05% for the CAC 40 in Paris and the FTSE in London, 0.12% for the Dax in Frankfurt and 0.05% for the EuroStoxx 50.

The lower-than-expected reading for the ISM services index, with new orders falling and input prices measured at a three-year low, has fueled debate over whether the Fed is leaning towards a pause in the rate hike on June 14.

But the slowing growth in activity in the sector, one of the main pillars of growth, could indicate that “all is not well in the economy”, underlined Ian Lyngen, at BMO Capital Markets.

Eight days before the decisions of the Federal Open Market Committee (FOMC), these questions temper the attractiveness of the equity markets. Moreover, the Fed’s possible pause next week could be followed by a rate hike in July, according to many observers.

VALUES TO FOLLOW:

AT WALL STREET

The New York Stock Exchange ended lower on Monday: the Dow Jones index fell 0.59% to 33,562.86 points, the S&P-500 lost 0.20%, to 4,273.75 points, and the Nasdaq Composite 0 .09% to 13,229.43 points.

The S&P-500 closed Friday at a nine-month high and the Nasdaq reached a new peak in a year.

In individual values, the Apple title reached a historic high in the session at nearly 185 dollars for a market capitalization of around 2.850 billion dollars. However, it erased its gains and ended down (-0.76%), as the global developer conference organized by the Californian group progressed, during which Apple notably presented a new mixed reality headset to 3,499 dollars, more than three times more expensive than the most expensive device sold by Meta in this same category.

Other digital giants, on the other hand, shone, such as Alphabet (+ 1.08%) or Tesla (+ 1.7%), whose sales in China of electric cars assembled in this country jumped in May.

Like JPMorgan (-0.98%), some large American banks suffered from the prospect, mentioned by the Wall Street Journal, of a tightening of capital rules after the bankruptcy of several large institutions intermediate in March.

IN ASIA

The Nikkei in Tokyo gained 0.76%, in mostly technical trading. It has gained 15% over the last three months, outperforming the main global indices. The 14-day RSI (Relative Strength Index) technical indicator, which provides a graphical representation of the strength of a trend, came in at 79, above the 70 threshold indicating an “overbought” market. “.

In China, equities are stable, awaiting a new policy to support economic recovery. The CSI 300 index fell 0.05% and the Shanghai SSE Composite 0.16%.

CHANGES

The index, which measures the fluctuations of the dollar compared to a reference basket, down 0.14%.

The euro thus returns to 1.0726 dollars whereas it had fallen below 1.07 on Monday.

The Australian dollar gained ground (+0.82%) after the rise of a quarter point, to 4.1%, of the key rate of the Reserve Bank of Australia (RBA), the highest for 11 years.

RATE

Yields on US government bonds fell a little in Asian trading, the day after the decline caused by the publication of the ISM services.

The ten-year, at 3.7062%, posted an increase of 1.5 basis points and the two-year, at 4.5037%, a rebound of two points.

OIL

The oil market is giving up a good part of the gains recorded the day before following the announcement by Saudi Arabia of a further reduction in its production.

Brent fell 0.35% to 76.44 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.44% to 71.83 dollars.

(Edited by Nicolas Delame)

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