by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected to be on a stable note on Monday at the start of the last quarter of the year, catching their breath after last weekend’s improvement resulting from a more marked slowdown than expected inflation in the euro zone and the United States.

According to the first available indications, the Parisian CAC 40 should lose 0.05% at the opening. The Dax in Frankfurt should gain 0.06%. The FTSE 100 in London is expected to fall by 0.16%. The EuroStoxx 50 index could fall by 0.02%.

While the third quarter was dominated by fears about the trajectory of rates from the major central banks, the announcement on Friday by Eurostat of a deceleration to 4.3% year-on-year in consumer prices in September in the euro zone, combined with a greater than expected slowdown in core PCE inflation in the United States, greatly relieved the markets. This did not prevent the Stoxx 600 from ending the entire quarter (-2.5%) with its biggest decline in a year.

Investors saw in the inflation figures the prospect of a lull in the rise in rates after recent particularly restrictive speeches from central bankers. Luis De Guindos, the vice-president of the European Central Bank (ECB), on Monday again rejected the idea of ​​a rate cut and said that returning to the 2% inflation target would not be easy, according to the Financial Times.

The fourth quarter which is opening should therefore not be without pitfalls for the markets. In addition to questions about rates, investors will be attentive to publications on manufacturing activity in Europe and the United States, scheduled for the day. At the end of the week, all eyes will turn to the monthly employment report from the US Department of Labor.

A WALL STREET

The New York Stock Exchange ended mixed on Friday, as investors digested data on inflation and their impact on the policy of the American Federal Reserve (Fed). The Dow Jones index lost 0.47%, or 158.84 points, to 33,507.5 points. The broader S&P-500 lost 11.65 points, or 0.27%, to 4,288.05 points. The Nasdaq Composite advanced 18.05 points (+0.14%) to 13,219.32 points. The inflation report painted “a better-than-expected but still elevated inflation picture,” said Eric Freedman, chief investment officer at US Bank Asset Management. From a sector point of view, energy and finance fell significantly, as a result of a rebalancing after their recent increases. In terms of values, Nike jumped after reporting a profit higher than expectations for the first quarter of its fiscal year.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index advanced 0.2% to 31,920.15 points, supported by export stocks in the wake of the fall of the yen, which fell to its lowest level in almost a year. The broader Topix takes 0.01% to 2,323.66 points as the close approaches.

The Honk Kong Stock Exchange is closed on Monday, while in mainland China, a week of annual holidays started after Friday’s session.

VALUES TO FOLLOW IN EUROPE:

CHANGES

The dollar is stable (+0.01%) against a basket of reference currencies, remaining close to a ten-month high, after achieving its best performance over a year in the third quarter, in a context of multiplication of messages restrictive from the Fed.

The Japanese currency is trading at 149.71 yen to the dollar, very close to the threshold of 150 which analysts say could trigger intervention from the Bank of Japan (BoJ).

The euro, which lost 3% over the entire past quarter, its biggest drop in a year, was virtually unchanged on Monday (-0.04%), at 1.0566 dollars.

RATE

The yield on ten-year US Treasury bonds is rising again, to 4.6124% (+4.1 basis points), close to a 16-year peak, after Friday’s temporary decline. Over the entire third quarter, it gained 76 basis points, its biggest increase since September 2022.

OIL

The oil market is practically stable after Friday’s drop, supported by a certain appetite for risky assets, the American Congress having notably adopted a draft provisional budget which avoids a “shutdown” considered catastrophic. Investors are also awaiting decisions from OPEC which meets on Wednesday.

Brent rose 0.17% to $92.36 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.20% to $90.97.

(Written by Claude Chendjou, edited by Bertrand Boucey)

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