by Blandine Henault

PARIS (Reuters) – The main European stock markets are expected to rise on Tuesday at the opening despite persistent tensions in the bond market where the rate of ten-year US government bonds hit a peak since 2007.

According to the first indications available, the Parisian CAC 40 could gain 0.44% at the opening. Futures are signaling a rise of 0.4% for the Dax in Frankfurt, 0.08% for the FTSE in London and 0.38% for the Stoxx 600.

Equity markets could be under pressure, however – US index futures are in the red – as sovereign bond yields climb on expectations of a longer-than-expected high interest rate environment.

The 10-year Treasuries rate hit a peak in Asian trading on Tuesday at 4.366%, surpassing its last peak in October to hit a 16-year high.

In this context, investors have their eyes riveted on the Federal Reserve symposium in Jackson Hole (Wyoming) where central bank president Jerome Powell is to speak at the end of the week.

Another potential source of stress on Tuesday for market operators, the agency S&P Global lowered the credit rating of several American banks, following a similar decision by its sister company Moody’s in early August.

RATE

After peaking earlier in Asian trading, the ten-year Treasuries yield is stabilizing at 4.34%.

In its wake, the yield on Japanese government bonds rose to its highest since 2014, at 0.67%.

CHANGES

The dollar remains near a ten-week high against a basket of benchmark currencies, supported by the surge in US bond yields.

The yen, however, moved away from its lowest since November against the greenback after the announcement of discussions on Tuesday between the governor of the Bank of Japan, Kazuo Ueda, and Prime Minister Fumio Kishida. Those talks focused on economic developments, not recent exchange rate volatility, the central bank official said.

AT WALL STREET

The New York Stock Exchange ended in disarray on Monday, pending the Jackson Hole symposium and Nvidia’s results, which will be released on Wednesday.

The Dow Jones index fell 0.11% to 34,463.69 points. The broader S&P-500 gained 0.69% to 4,399.77 points.

The Nasdaq Composite advanced for its part by 1.56% to 13,497.59 points, carried by the jump of Nvidia (+ 8.2%) which benefited from an increase in the price target of HSBC to 780 dollars , the second highest amount on Wall Street.

IN ASIA

The Tokyo Stock Exchange gained 0.81% as the close approached, driven by the rise in banking stocks with the rise in bond yields and by the advance in stocks linked to semiconductors in the wake of Nvidia.

In China, the trend is more mixed, with investors still worried about the health of the world’s second largest economy. The CSI 300 fell 0.25% while the Hong Kong Stock Exchange’s Hang Seng attempted a rebound (+0.17%) after seven consecutive sessions in the red which took it to a nine-month low.

VALUES TO FOLLOW IN EUROPE:

European stocks linked to semiconductors could benefit from Nvidia’s jump on Monday evening on Wall Street, while banks are likely to be penalized by S&P’s downgrading of the rating of several American establishments.

OIL

Crude prices were down slightly on Tuesday, with concerns over Chinese demand still holding back despite the cut in supply.

The barrel of Brent from the North Sea fell 0.19% to 84.30 dollars and that of American light crude lost 0.1% to 80.65 dollars.

(Written by Blandine Hénault, edited by)

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