by Claude Chendjou
PARIS (Reuters) – The main European stock markets are expected to cautiously rise on Tuesday against a backdrop of dollar weakness following comments from central bankers in China and Japan who should offer some support to the indices before the publication of monthly data on US inflation and the monetary policy decisions of the European Central Bank (ECB).
According to the first available indications, the Parisian CAC 40 should gain 0.21% at the opening, the Dax in Frankfurt 0.08% and the FTSE 100 in London 0.17%. The EuroStoxx 50 index is expected to increase by 0.19%.
The dollar, which last week was on a series of eight consecutive weekly gains, the longest since 2014, ended down 0.5% on Monday.
Meanwhile, the yen recorded its best daily performance in two months against the dollar on Monday after Bank of Japan (BoJ) Governor Kazuo Ueda said policymakers could have enough economic information by end of the year to determine whether short-term rates will need to rise.
The yuan, for its part, experienced its best session in six months after China’s commitment to ensure the stability of its currency, Reuters having also reported that the Chinese central bank had intensified its control over purchases of dollars.
However, the two currencies remain close to their lowest level of the year with the yuan trading at 7.3016 per dollar and the yen at 146.68 per dollar.
In terms of economic indicators, the Reuters consensus forecasts a reacceleration of consumer prices (CPI) in the United States in August, to 0.6% month-on-month (compared to +0.2% in July), and an increase of 3.6% over one year (compared to +3.2% the previous month). On the other hand, basic inflation, known as core CPI, is expected to slow to 4.3% over one year.
For the moment, traders are counting with a 93% probability of a status quo on Fed rates for the September 20 meeting, but for the November meeting the probability of a pause is only 53%, according to the CME Group Fedwatch barometer.
In the euro zone, the Reuters survey predicts that the ECB will also opt for a break on Thursday, but economists are very divided on the future.
In today’s data, the market awaits Germany’s ZEW investor sentiment index, while Britain’s unemployment rate rose in the three months to July to 4.3%, its highest level since September 2021.
A WALL STREET
The New York Stock Exchange ended up on Monday, driven in particular by the rise of Tesla (+10.09%), Morgan Stanley estimating that the market capitalization of the automobile manufacturer could increase by nearly 600 billion dollars (559.4 billion euros) thanks to the potential of its Dojo supercomputer.
The Dow Jones index gained 0.25%, or 87.13 points, to 34,663.72 points.
The broader S&P-500 gained 29.97 points, or 0.67%, to 4,487.46 points.
The Nasdaq Composite advanced 156.37 points (+1.14%) to 13,917.89 points.
On the Tokyo Stock Exchange, the Nikkei index advanced 0.95% to 32,776.37 points and the broader Topix gained 0.82% to 2,379.91 points at the close.
The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) gained 0.12%.
In China, the Shanghai SSE Composite fell 0.08%, while the CSI 300 lost 0.07%, with the indices close to balance after benefiting from news that property developer Country Garden was awarded the approval of its creditors to extend the repayment of six “onshore” bonds by three years.
The real estate index on the Hang Seng in Hong Kong rose up to 1.5%, while it was falling before this information.
VALUES TO FOLLOW IN EUROPE:
On the foreign exchange market, the euro is practically stable, at 1.0735 dollars (-0.12%) but reached a one-week high during the session, at 1.0771 dollars.
The pound sterling is also stable, at 1.2504 dollars (-0.04%).
As for bond yields, the rate on ten-year US Treasury bills is also practically unchanged, at 4.2941% while investors await US inflation figures which could influence the Fed’s decisions in a week.
The yield on the ten-year German Bund is also stagnating, at 2.638%
The oil market is up slightly while awaiting the figures for crude stocks in the United States which will be published at 8:30 p.m. GMT.
Brent advanced 0.31% to $90.92 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.41% to $87.65.
(Written by Claude Chendjou, edited by Nicolas Delame)
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.