PARIS (Reuters) – The main European stock markets are expected to be mixed at the opening on Wednesday, in a climate of concern marked by the reassessment of the trajectory of American rates and bond yields to the highest in 16 years.

According to the first available indications, the Parisian CAC 40 would open without management.

Futures contracts on the FTSE in London suggest a decline of 0.18%, compared to 0.13% for the Dax in Frankfurt and a stable EuroStoxx 50. European stock markets are hesitating after four consecutive sessions of decline, under pressure from massive bond sales which took yields on 10-year US Treasury bonds to their highest in 16 years.

Assets are adjusting to the rhetoric of central banks, which have insisted that rates will remain higher for longer, while dealing with a series of ominous indicators.

The latest data showed a sharper than expected drop in sales of new homes in the United States while consumer confidence also deteriorated more quickly than expected, while Federal Reserve officials insist on the need to bring inflation back to its target even if it means sacrificing economic growth.

“The mood is one of distrust and the recent trend in the markets is an increase in pessimism. Hopefully the flow of data will bring positive surprises but for the moment, worry will dominate,” write Rabobank strategists.

Among the indicators expected this week, new orders for durable goods in the United States will be published on Wednesday, while the final GDP for the second quarter is expected on Thursday and the PCE inflation index will be published on Friday, with the figure of inflation in the euro zone.

A WALL STREET

The New York Stock Exchange ended sharply lower on Tuesday as the yield on 10-year US Treasuries held at a 16-year high, amid concerns that interest rates will remain high longer than anticipated and their potential impact on the economy.

The Dow Jones index fell 1.14%, or 388 points, to 33,618.88 points.

The broader S&P-500 lost 63.91 points, or 1.47%, to 4,273.53 points.

The Nasdaq Composite fell 207.71 points (1.57%) to 13,063.61 points.

IN ASIA

Japanese markets are falling in the wake of Wall Street and following profit-taking on value securities.

The Nikkei lost 0.4% to 32,174.84 as the close approached and hit a one-month low during the session, with the Topix holding at 2,370.41 points.

The Topix index of value stocks fell 0.2%, compared to an increase of 0.1% for the Topix index of growth stocks.

Among individual stocks, Fast Retailing, owner of the Uniqlo brand, lost 2.26%.

In China, declines in industrial profits are easing thanks to government support, data showed on Wednesday, while the central bank pledged to support the recovery, improving sentiment.

The Shanghai SSE Composite nibbles 0.25%, the CSI 300 0.18%, and the Hong Kong Hang Seng index 0.63%.

CHANGES

Foreign exchange markets are calm, with the dollar nevertheless remaining at a 10-month high.

The dollar advanced 0.05% against a basket of reference currencies, the euro lost 0.13% to 1.0556 dollars, while the pound sterling lost 0.13% to 1.2141 dollars.

In Asia, the yen is stable at 149.04 yen per dollar, close to the level of 150 which triggered central bank intervention, while the Australian dollar loses 0.25% to 0.638 dollars, inflation published on Wednesday not having surprised the markets.

RATE

US rates fell slightly after having risen sharply in the wake of the Fed’s monetary policy decision on September 20.

The ten-year Treasury yield fell 3.3 basis points to 4.5255%, while the two-year rate fell 1.3 bps to 5.0644%.

OIL

Oil is rising as markets believe production cuts will be enough to maintain prices, despite demand that could decline under the pressure of higher rates.

Brent advanced 0.98% to $94.88 per barrel, with American light crude (West Texas Intermediate, WTI) gaining 1.02% to $91.31.

(Written by Corentin Chappron, edited by Bertrand Boucey)

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