by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected to be on a cautious note on Tuesday before the publication of monthly inflation figures in the United States as the American Federal Reserve (Fed) begins a two-day monetary policy meeting.

Risk-taking is also expected to be limited as the Stoxx 600, which ended Monday up 0.3% at 473.70 points, is at a 22-month high and Goldman Sachs predicts the pan-European index will peak to 500 points at the end of 2024.

According to the first available indications, the Parisian CAC 40, close to its historic peak of 7,581.26 points, should gain 0.15% at the opening. The Dax in Frankfurt could gain 0.1%. The FTSE 100 in London is expected to gain 0.11%. The EuroStoxx 50 index is expected to increase by 0.09%.

The Fed will make its decisions on Wednesday after taking note at 1:30 p.m. GMT of consumer prices (CPI) for the month of November for which the Reuters consensus forecasts stagnation from one month to the next and an annual deceleration to 3 .1%. The basic CPI, excluding volatile elements, is expected at +0.3% and +4.0% respectively.

“If the core CPI reaches or exceeds 4.2% year-over-year, equity traders will likely rush to hit the sell button first and then ask questions later,” predicts Tony Sycamore, market analyst at IG.

“If the core CPI settles at 3.9% or lower, that would be a green light for stock markets to extend their rally until the end of the year,” he adds.

After the Fed, the European Central Bank (ECB), the Bank of England (BoE) and the Swiss National Bank (SNB) will make their decisions on Thursday and a status quo on rates for all these central banks is expected.

The main unknowns for investors relate to the timing and pace of rate cuts expected in 2024, with most central bankers and some economists believing that markets have shown exaggerated optimism about the expected easing since November.

Central banks should also provide information on the evolution of the economy as the market expects a soft landing for the American economy.

A WALL STREET

The New York Stock Exchange ended Monday up slightly, enough to close at its highest points of the year, with investors increasingly convinced that the Fed is done with its interest rate hikes and that it will could trigger a cycle of declines from the first half of next year.

The Dow Jones index gained 0.43%, or 157.06 points, to 36,404.93 points.

The broader S&P-500 gained 18.07 points, or 0.39%, to 4,622.44 points.

The Nasdaq Composite advanced 28.51 points (+0.20%) to 14,432.49 points.

In terms of values, the Philadelphia semiconductor index rose to its highest since January 2022 with an increase of 3.4%, driven by the 9% jump in Broadcom, Citigroup having resumed its coverage on the title to “purchase”.

Cigna, a health insurance specialist, for its part jumped 16.68% after abandoning its plan to acquire Humana (-1.04%) and announcing on Sunday its intention to buy back for $10 billion additional of his actions.

Macy’s soared 19.4%. According to a source, a consortium of investors led by Arkhouse Management and Brigade Capital has submitted a $5.8 billion offer to delist the department store chain.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index advanced 0.16% to 32,843.7 points, while the broader Topix fell 0.23% to 2,353.16 points at the close. The positive trend was driven by stocks linked to semiconductors such as Renesas Electronics (+4.37%) or Screen Holdings (+3.06%).

The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) gains 0.38%

In China, the Shanghai SSE Composite increased by 0.27% and the CSI 300 increased by 0.13%.

VALUES TO FOLLOW IN EUROPE:

EXCHANGES/RATES

The dollar falls by 0.12% against a basket of reference currencies

The euro nibbles 0.06%, to 1.0767 dollars, while the pound sterling stands at 1.2576 dollars (+0.18%).

On the bond market, the yield on ten-year American bonds fell by around three basis points, to 4.2082%, while the Treasury must sell $21 billion worth of 30-year bonds this Tuesday.

OIL

The oil market progresses cautiously on Tuesday before the conclusions of COP28, the publication of American inflation figures and the decisions of central banks.

Brent rose 0.76% to $76.61 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.86% to $71.93.

MAIN ECONOMIC INDICATORS ON THE AGENDA FOR DECEMBER 12:

COUNTRY GMT INDICATOR PERIOD PREVIOUS CONSENSUS

FROM 10:00 a.m. ZEW Dec sentiment index 8.8 9.8

investors

USA 1:30 p.m. Consumer prices (CPI) Nov. +0.0% +0.0%

-over one year +3.1% +3.2%

(Written by Claude Chendjou, edited by Zhifan Liu)

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