by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected on an undecided note at the opening on Tuesday at the start of a two-day monetary policy meeting of the United States Federal Reserve (Fed) and before the publication of the quarterly results of two giants of new technologies, Alphabet and Microsoft.

According to the first indications available, the CAC 40 in Paris should gain 0.09% at the opening, the Dax in Frankfurt nibble 0.08% and the FTSE 100 in London 0.06%. The EuroStoxx 50 index is expected to rise by 0.18%.

A final 25 basis point rate hike from the Fed, to a range of 5.25%-5.50%, is expected on Wednesday at the end of its two-day meeting and investors want to believe that the monetary tightening cycle of the European Central Bank (ECB), which meets on Thursday, will also soon come to an end, with the peak in eurozone rates estimated at 4%, against 3.5% currently. In the meantime, the market will follow two confidence indicators in Germany and the United States on Tuesday.

On the micro-economy side, the week is rich in corporate results, particularly in aeronautics (Airbus, Boeing), luxury (Hermès, L’Oréal, LVMH), banking (BNP Paribas, Deutsche Bank, LLoyds), ​​energy (TotalEnergies, Shell, Centrica), pharmaceuticals (Sanofi, GSK, AstraZeneca), automotive (Renault, Mercedes-Benz, Volkswagen), distribution (Carrefour), construction (Bouygues, Vinci) or yet everyday consumer goods (Danone, Unilever, Reckitt Benckiser).

But it is above all the publications of Alphabet and Microsoft on Tuesday evening, then those of Meta Platforms on Wednesday evening, which will weigh on the indices, after the disappointment linked to the results of Netflix and Tesla last week.

The Nasdaq, rich in technology stocks, sensitive to changes in interest rates, has gained 41% since the start of the year, outperforming other Wall Street indices.

“As the Fed meetings this week fall amidst a forest of earnings, investors in equity markets will have important valuations to arbitrate in their portfolios. So a restrictive statement from the Fed may not have a direct impact on stock prices if earnings are good enough,” said Ipek Ozkardeskaya, analyst at Swissquote Bank.

AT WALL STREET

The New York Stock Exchange ended up Monday driven by sectors other than technology upstream of quarterly results.

The Dow Jones Industrial Average gained 0.52%, or 183.55 points, to 35,411.24 points.

The broader S&P-500 gained 18.30 points, or 0.40%, to 4,554.64 points.

The Nasdaq Composite advanced for its part by 26.06 points (0.19%) to 14,058.87 points.

The Dow Jones ended in the green for the eleventh consecutive session, a series not seen since February 2017, in the wake of Chevron in particular, which reported over the weekend preliminary results that exceeded expectations for the quarter.

As for the quarterly results of S&P-500 companies, a decline of 7.9% is expected, according to Refinitiv data released on Friday.

Nine of the eleven main sectors of the S&P-500 ended the session in the green, the first being energy.

IN ASIA

At the Tokyo Stock Exchange, the Nikkei index ended down 0.06% at 32,682.51 points, while the broader Topix gained 0.18% at 2,285.38 points. The trend was cautious ahead of the Bank of Japan (BoJ) monetary policy meeting.

The MSCI index comprising stocks in Asia and the Pacific (excluding Japan) rebounded 1.5%, heading for a positive close after six sessions of decline, the main Chinese leaders having pledged Monday to strengthen support for the economy.

In China, the Shanghai SSE Composite gained 2.04% and the CSI 300 gained 2.77%.

EXCHANGES/RATES

The dollar fell by 0.18% against a basket of reference currencies, including the euro, which is displayed at 1.1086 dollars (+0.22%).

The single European currency hit a two-week low of $1.1059 on Monday after the release of PMI indices showed a sharper-than-expected slowdown in activity in July.

The offshore Chinese yuan strengthened 0.4% to 7.1573 per dollar after the authorities’ stimulus promises.

In the bond market, the yield on ten-year US Treasuries takes about three basis points to 3.8864%.

The ten-year German Bund yield rose nearly five points to 2.439%.

OIL

The oil market rose for the third session in a row after China’s commitments: Brent gained 0.34% to 83.02 dollars a barrel and American light crude (West Texas Intermediate, WTI) 0.38% to 79.04 dollars.

(Written by Claude Chendjou, edited by Tangi Salaün and Kate Entringer)

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