by Diana Mandia

(Reuters) – Wall Street is expected to fall on Wednesday and European stocks fell mid-session for a sixth consecutive day, amid concerns about economic growth and inflationary risks induced by rising oil prices.

Futures on New York indices suggest an opening on Wall Street down 0.19% for the Dow Jones, 0.23% for the Standard & Poor’s-500 and 0.31% for the Nasdaq.

In Paris, the CAC 40 lost 0.81% to 7,195.8 around 11:09 GMT. In Frankfurt, the Dax is down 0.35% and in London, the FTSE is down 0.65%.

The pan-European FTSEurofirst 300 index fell by 0.69%, the euro zone’s EuroStoxx 50 by 0.64% and the Stoxx 600 by 0.66%.

Market sentiment deteriorated as higher Brent oil prices jumped to above $90 on Tuesday, buoyed by Russia and Saudi Arabia’s decision to continue cutting production. This increase, even if it eased on Wednesday, fuels concerns about the persistence of inflationary pressures.

“Energy prices are important drivers of inflation, and just when the price spiral appears to be heading more tamely downward, high crude prices could cause disruption,” Susannah noted. Streeter, analyst for Hargreaves Lansdown.

Further signs of weakness in the Chinese and European economies, highlighted by the release of PMI indices on Tuesday, are also weighing on market sentiment, with investors wondering how long major central banks will keep interest rates high to curb inflation.

European Central Bank (ECB) Governing Council member Klaas Knot said on Wednesday, quoted by Bloomberg, that markets may underestimate the likelihood of another round of tightening and that the inflation target of 2 % set by Frankfurt for the end of 2025 was “the bare minimum”.

François Villeroy de Galhau, Governor of the Banque de France and member of the Governing Council of the ECB, for his part reiterated that Frankfurt was keeping its options open for its next monetary policy council, on September 14, and the following council.

In further evidence of slowing growth, investors learned on Wednesday that German factory orders and eurozone retail sales fell more than expected in July.

IN WALL STREET

The New York Stock Exchange is expected lower Wednesday at the open as investors await key data, including the release of the Federal Reserve’s Beige Book on the state of the US economy.

In stocks, Apple lost 0.7% in market preview, after the Wall Street Journal (WSJ) reported on Wednesday that China has banned its state officials from using an iPhone.

VALUES IN EUROPE

The telecom compartment rose by 0.12%, supported in particular by Telefonica (0.9%) after the Saudi group STC acquired a 9.9% stake in the former public monopoly.

The personal and household goods sector is down 1.09%, with some major luxury players, battered by fears about the Chinese economy, being the source of this downward momentum. Moncler thus lost 3.25%, Burberry 2.1% and LVMH 1.8%.

InPost, for its part, is up 9.42% after the Polish company listed in Amsterdam reported a higher quarterly profit margin.

RATE

Eurozone bond yields edged higher on Wednesday to their highest level in two weeks, following an ECB survey showing consumer expectations for inflation have risen, bolstering arguments in favor of a further rise in interest rates.

The German ten-year yield moved to 2.613%, while that of the two-year rate advanced by 3 bp to 3.065%.

U.S. bond markets are digesting signals about Federal Reserve (Fed) interest rate decisions, including dovish remarks from Board of Governors member Christopher Waller, who on Tuesday said the latest economic indicators leave room for maneuver.

Ten-year and two-year Treasury yields fell more than 2 basis points to 4.244% and 4.9428% respectively.

CHANGES

Supported on Tuesday by concerns about growth, the dollar calmed down and lost 0.1% on Wednesday against a basket of benchmark currencies, while the euro advanced 0.21% to 1.0743 dollars.

OIL

Oil prices are starting to fall again on Wednesday after rising more than 1% and reaching their highest level in nearly a year the day before.

With the rise in the value of the US dollar and the lull over fears over supply cuts from Saudi Arabia and Russia, Brent fell 0.52% to $89.57 a barrel, the US light crude (West Texas Intermediate, WTI) dropping 0.42% to $86.33.

(Written by Diana Mandia)

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