PARIS (Reuters) – The main European stock markets are expected to fall on Tuesday at the opening, as optimism about the Chinese economy wanes and uncertainty increases over the trajectory of US rates.
The first indications available indicate that the Parisian CAC 40 would decline by 0.10% at the opening. Futures on the FTSE in London suggest a decline of 0.29%, compared to 0.13% for the Dax in Frankfurt, and 0.14% for the EuroStoxx 50.
Caixin activity indicators showed China’s services activity grew at its weakest pace in eight months in August, suffocated by sluggish demand and insufficient stimulus.
Adding to investor concerns, Federal Reserve Board of Governors member Loretta Mester said Monday that inflation remained too high and labor markets were strong.
“Comments from a member of the Fed and a better than expected ISM Manufacturing index (have taken) precedence over an employment report favorable to an end to the monetary tightening cycle” on Monday, note the strategists of Natixis.
“The US August jobs report boosts the likelihood of a Fed status quo in September, but November uncertainty remains high.”
On Tuesday, the Australian central bank also decided to maintain its rates at their current level, accompanying its decision with a reassuring message on the return of inflation to its target.
Final services and composites PMI indicators are due from 0750 GMT on Tuesday for many countries in the euro zone, and should confirm the slowdown in the European economy in August, urging investors to be cautious.
AT WALL STREET
Wall Street was closed Monday on the occasion of “Labor Day”, which marks the end of the summer vacation period.
IN ASIA
Japanese markets decline, driven lower by profit taking. The Nikkei lost 0.21% to 32,870.00 points, the Topix fell 0.16% to 2,370.04 points.
JFE Holdings posted the worst performance in the Nikkei, losing 6.52% after the company announced that its board was considering setting up a financing plan of up to 200 billion yen (1, 26 billion euros).
The deterioration in sentiment in China weighs on local equities, after the publication of the Caixin activity index worse than expected. The Shanghai SSE Composite dropped 0.66%, the CSI 300 0.63%, and the Hong Kong Hang Seng index 1.49%.
CHANGES
Foreign exchange markets are stable in a wait-and-see context.
The dollar is treading water against a basket of benchmark currencies, with the euro remaining stable at $1.0788, while the pound sterling is holding steady at $1.2622.
In Asia, the yen lost 0.20% to 146.75 yen to the dollar, while the Australian dollar dropped 0.62% to 0.6418 dollars, after the meeting of the Australian central bank on Tuesday, which maintained its rates at their current levels.
RATE
US rates rise after Loretta Mester’s comments. The ten-year Treasury yield rose 3.9bp to 4.2123%, while the two-year rate rose 3.1bp to 4.8991%.
OIL
Oil is hesitating, torn between the slowdown in Chinese activity and the resistance of the American economy.
Brent is stable at $88.96 a barrel, with US light crude (West Texas Intermediate, WTI) gaining 0.48% to $85.96.
(edited by Corentin Chapron)
Copyright © 2023 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
