by Laetitia Volga

PARIS (Reuters) – A slight drop is looming on Tuesday for the main European stock markets, as the long-awaited decisions of the People’s Bank of China in favor of the economy did not meet investors’ expectations.

Futures contracts suggest a decline of 0.3% for the Paris CAC 40, 0.23% for the Dax in Frankfurt, 0.21% for the FTSE in London and 0.14% for the EuroStoxx 50 .

China’s central bank (PCB) cut its one-year and five-year prime lending rates by ten basis points to boost demand for credit, but the majority of observers expected a bigger cut for the five-year rate.

“These marginal rate cuts will likely help prevent growth from slowing sharply, but are unlikely to provide a strong momentum capable of reversing the trend in the near future,” analysts at BofA Global Research said.

Citi, following in the footsteps of other major investment banks, lowered its Chinese growth forecast from 6.1% to 5.5%.

The main meeting of the week will be Wednesday the first half-yearly hearing in Congress of the President of the Federal Reserve, whose investors are awaiting other indications on the outlook for monetary policy.

VALUES TO FOLLOW IN EUROPE:

IN ASIA

Shanghai’s SSE Composite fell 0.37% and Hong Kong’s Hang Seng 1.96% after the BPC announcements.

The market was also disappointed by the visit to Beijing by US Secretary of State Antony Blinken, which did not lead to any major progress in relations between the two leading world powers.

In Japan, the Nikkei index ended stable at 33,388.91 points.

AT WALL STREET

Closed on Monday for a holiday, the New York Stock Exchange will reopen during the day and the “futures” on indices give a drop of 0.2% to 0.4%.

RATES/EXCHANGES

On the bond market, the US ten-year yield stands at 3.7984%, up three basis points. The German title of the same maturity fell a little, below 2.5%.

The dollar is unchanged against a basket of currencies and the euro is around 1.0927.

The yuan is approaching its lowest level for seven months, a consequence of the rate cut decided by the BPC.

OIL

Oil prices retreated on worries about demand prospects in China after the country’s central bank cut rates less than expected.

Brent fell 0.43% to $75.76 a barrel. US light crude (West Texas Intermediate, WTI) fell 1.42% to $70.76 from Friday’s close.

NO MAJOR ECONOMIC INDICATOR ON TODAY’S AGENDA

(edited by Bertrand Boucey and Kate Entringer)

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