by CORENTIN CHAPPRON

PARIS (Reuters) – Wall Street is expected to rise on Tuesday, while European stock markets advanced sharply at midday, equity markets benefiting from cheap purchases and the rise in technology stocks.

Futures on New York indices suggest an opening up 0.23% for the Dow Jones, 0.44% for the Standard & Poor’s 500 and 0.6% for the Nasdaq.

In Paris, the CAC 40 climbed 1.25% to 7,287.7 points around 10:36 GMT, against an increase of 0.62% for the FTSE in London and 1.1% for the Dax in Frankfurt.

The pan-European FTSEurofirst 300 index gained 1.09%, the EuroStoxx 50 gained 1.46% and the Stoxx 600 gained 1.19%.

European indices are rebounding from last week’s decline, triggered by investors’ reassessment of the trajectory of US rates.

The resilience of the US economy raised fears that the Federal Reserve (Fed) might raise rates again, which sent sovereign bond prices plunging and pressure on risky assets.

Investors are gearing up for the Jackson Hole meeting, where Fed Chairman Jerome Powell will speak on the US economy on Friday.

In addition, the support of the technology sector contributed significantly to the positive performance of equity indices. Chip designer Nvidia is in particular the center of attention ahead of the release of its quarterly results on Wednesday.

RATE

Bond yields are falling on both sides of the Atlantic, after their jump in recent days which took the 10-year US to its highest since November 2007 on Tuesday morning in Asian trading.

The ten-year Treasury yield fell 3.2bp to 4.3102%, with the two-year flat at 4.9901%.

The ten-year German rate fell by 4.8 bp to 2.659%, while that of two years fell by 2.2 bp to 3.089%.

“Europe is subject to the economic situation and does not set prices, in a market context where the direction of yields on Bunds, swaps, the euro and the yuan is dictated by the discussion on the higher neutral rate in the United States and the defense of the yuan”, summarizes Kenneth Broux, strategist at Societe Generale CIB.

THE VALUES TO FOLLOW IN WALL STREET

The American group Activision Blizzard will sell Ubisoft the streaming rights of its video games in an attempt to obtain the agreement of the British regulator to the proposed takeover by Microsoft.

VALUES TO FOLLOW IN EUROPE

At the top of the Stoxx 600, Ubisoft soars by more than 7% after the announcement of the agreement with Activision.

The tech sector posted the best sector performance of the Stoxx 600, up 2.48%, with semiconductor-related stocks benefiting from the rise of Nvidia.

In Amsterdam, ASML and ASMI advance respectively by 3.65% and 3.18%, against 2.05% for BESI. In France, STMicroelectronics gains 2.93%, while in Germany, Infineon increases by 2.94%.

Prysmian posted one of the best performances in the Stoxx 600, gaining 4.4%, the cable manufacturer having been favored to supply three projects in Germany worth 4.5 billion euros.

CHANGES

Calm prevails on the currency side, with traders remaining focused on defending the yuan and positioning themselves cautiously ahead of the Jackson Hole meeting.

The dollar fell 0.04% against a basket of benchmark currencies, in the wake of falling bond yields.

The euro is treading water at 1.0888 dollars, while the pound sterling has gained 0.13% at 1.277 dollars.

OIL

Crude prices are trending down as markets remain worried about the Chinese economy.

Brent fell 0.43% to $84.1 a barrel, with US light crude (West Texas Intermediate, WTI) falling 0.22% to $80.54.

(Written by Corentin Chapron, edited by Blandine Hénault)

Copyright © 2023 Thomson Reuters