by Claude Chendjou

PARIS (Reuters) – Wall Street is expected to be on a cautious note at the opening on Thursday, while European stock markets are on a downward trend at mid-session in a context of risk aversion linked to fears of an escalation in the Near -East, which adds to company results considered disappointing.

New York index futures signal Wall Street opening down 0.07% for the Dow Jones and 0.14% for the Standard & Poor’s 500, while the Nasdaq could gain 0.04%.

In Paris, the CAC 40 fell by 0.6% to 6,924.44 points around 11:30 GMT. In Frankfurt, the Dax fell by 0.25% and in London, the FTSE lost 0.81%.

The pan-European FTSEurofirst 300 index lost 0.76% and the eurozone’s EuroStoxx 50 lost 0.15%. The Stoxx 600 lost 0.77%, after losing up to 1% during the session, to a two-week low.

Tensions arising from the conflict between Israel and Palestinian Hamas did not weaken on Thursday despite an agreement on aid to the Gaza Strip, with Egypt having agreed to reopen a border crossing point with the Palestinian enclave. However, the humanitarian crisis in Gaza continues to worsen and numerous anti-Israel demonstrations are underway in the Arab world.

On the economic front, while the American Federal Reserve (Fed) is due to hold its monetary policy meeting at the end of the month, a speech by its president, Jerome Powell, is scheduled for this Thursday at 4:00 p.m. GMT. Other Fed officials, such as Raphael Bostic, Austan Goolsbee and Patrick Harker, are also scheduled to speak today.

In the meantime, US bond yields are still tightening after a sharp rise the day before linked to the publication of data showing an increase in house construction in the United States. This could support the scenario of high interest rates for a long time.

Macroeconomic indicators in the United States such as jobless claims, home resales and the activity index in the Philadelphia region, forecast in the afternoon, may or may not increase pressure on bond yields.

“A mix of concerns about inflation and the resilience of the US economy are clearly the main reason why markets have reassessed the likelihood of another rate hike by the Fed later this year” , explains Thomas Hempell, research manager at Generali Investments.

“(There are) uncertainties about the behavior of the Fed, and this obviously adds to the tensions in the Middle East,” he added.

VALUES TO FOLLOW AT WALL STREET

Tesla fell 4.7% in pre-market trading, the automaker having reported on Wednesday a gross margin for the July-September period down on an annual basis, narrowly missing Wall Street’s expectations.

Netflix jumped 13.3% in pre-market trading after the publication of its quarterly results which show that the video-on-demand platform has shattered expectations in terms of new subscribers.

VALUES IN EUROPE

In Europe, the negative trend is led by the automobile (-1.74%) and real estate (-1.6%) segments, sensitive to variations in interest rates.

Renault fell by 7.06% after the publication of its results marked by unfavorable exchange rate effects.

Pernod Ricard advances by 4.28%, with the group anticipating growth in its annual revenues.

Nokia lost 4.17%, the drop in demand for 5G equipment having reduced its third quarter sales by a fifth.

RATE/EXCHANGE

The yield on US Treasury bonds gained 6.4 basis points, to 4.9748%, while the two-year gained around two points, to 5.242%, to a 17-year high, before Jerome Powell’s intervention.

The ten-year and two-year German Bund yields are stable, at 2.931% and 3.254% respectively after respective gains on Wednesday of 3.7 points and one point.

At exchange rates, the dollar fell slightly, by 0.09%, against a basket of reference currencies, including the euro which gained 0.18% to 1.0554 dollars.

OIL

The oil market is declining after the agreement between the opposition and the Venezuelan government which could lead the United States to ease sanctions affecting the Venezuelan oil sector.

Brent fell 1.31% to $90.3 per barrel and American light crude (West Texas Intermediate, WTI) lost 1.1% to $87.35.

(Writing by Claude Chendjou, edited by Kate Entringer)

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