by CORENTIN CHAPRON

PARIS (Reuters) – Wall Street is expected on a mixed note on Monday while European stock markets decline at midday, the trajectory of rates continuing to worry investors ahead of the publication of crucial inflation data this week.

New York index futures suggest an opening down 0.04% for the Dow Jones, 0.08% for the Standard & Poor’s 500 and 0.11% for the Nasdaq.

In Paris, the CAC 40 declined by 0.46% to 7,151.57 points around 11:07 GMT. The FTSE in London fell by 0.63% and the Dax in Frankfurt lost 0.57%.

The pan-European FTSEurofirst 300 index lost 0.53%, the EuroStoxx 50 0.56% and the Stoxx 600 0.5%.

Central bank meetings in recent weeks have shifted market sentiment, with investors now realizing that rates will not fall as quickly as expected.

The evolution of inflation and activity will be decisive in the monetary trajectory. Attention is focused on inflation indicators in the euro zone and the United States, expected for Friday at the end of a busy week of economic data. Quarterly gross domestic product (GDP) figures from Britain and the United States are also on the agenda, as are retail sales in Germany.

Several monetary policy makers, including Christine Lagarde and Isabelle Schnabel for the European Central Bank, are also due to speak on Monday.

“There remain numerous upside risks for rates between now and the end of the year, especially if the signals of a slowdown in American activity do not materialize a little more clearly,” write Natixis strategists.

The Chinese economic outlook is also weighing on sentiment in Europe, with the S&P rating agency having notably lowered its growth forecasts for China.

VALUES TO FOLLOW IN EUROPE

The luxury sector is falling after the S&P agency lowered its growth outlook for the Chinese economy. Kering drops 3.38%, LVMH 1.63% and Hermès 2.57%. Elsewhere in Europe, Richemont, Moncler and Burberry lost 1.84%, 2.12% and 2.59% respectively, while the luxury sector index fell by 1.98%.

Ubisoft gains 2.41%, with Exane BNP Paribas “outperforming” on the video game publisher.

Klépierre lost 2.83% after RBC lowered its recommendation to “underperformance” from “performance in line with the sector”.

Monte Dei Paschi Di Siena rises 1.89% after sources indicated that Italy is unable to sell its stake in the bank in the short term and could instead sell small blocks of shares in the markets.

Telecom Italia fell 1.32%, the American fund KKR having asked the Italian telecoms operator to extend the deadline to October 15 to submit a firm offer on its fixed network.

RATE

Bond markets are positioning themselves before the publication of inflation data, with the German 10-year yield hitting a ten-year high during the session, at 2.809%.

The ten-year Treasury yield increased by 5.1 bp to 4.4906%, close to its highest level since 2007 reached on Friday, at 4.508%.

CHANGES

The currency market is quiet awaiting inflation data, which will be key in determining the future path of rates on both sides of the Atlantic.

The dollar gained 0.05% against a basket of reference currencies, the euro lost 0.16% to 1.0635 dollars and the pound sterling stood still, at 1.2236 dollars.

OIL

Concerns about the imbalance between supply and demand are supporting crude oil prices, which are advancing moderately.

Brent rose 0.23% to $93.48 per barrel and American light crude (West Texas Intermediate, WTI) gained 0.11% to $90.13.

(Written by Corentin Chappron, edited by Blandine Hénault)

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