by Blandine Henault

PARIS (Reuters) – The main European stock markets are expected to fall at the opening on Wednesday, with investors opting at the start of the year to take profits after the strong rally at the end of 2023.

Futures contracts report a decline of 0.27% for the CAC 40, 0.14% for the Dax in Frankfurt, 0.07% for the FTSE in London and 0.04% for the Stoxx 600.

Caution dominated the day before, for the first session of 2024, and the trend still looks towards consolidation after a euphoric end to 2023 on the stock markets. Profit-taking particularly impacted technology stocks on Tuesday against a backdrop of rising bond yields.

Caution is also fueled by increased tensions in the Middle East with the assassination by Israel of the number two in the political office of Palestinian Hamas, Saleh al Arouri, in Lebanon, which increases the risks of a propagation of the conflict beyond the Gaza Strip.

Investors will also closely follow the publication in the evening of the minutes of the latest monetary policy meeting of the Federal Reserve. Before that, the American ISM manufacturing index and the JOLTS survey on job offers will be published in the afternoon.

VALUES TO FOLLOW IN EUROPE:

A WALL STREET

The New York Stock Exchange ended in mixed order on Tuesday, with only the Dow Jones registering slightly in the green during this first session of the year, while Apple and other major technology stocks fell in parallel with the rise in bond yields.

The Dow Jones index gained 0.07% to 37,715.04 points. For their part, the S&P-500 lost 0.57%, to 4,742.83 points, and the Nasdaq Composite fell 1.63% to 14,765.94 points.

On the value side, Apple fell 3.6% after Barclays downgraded its recommendation for the Apple firm to “underperformance”.

Conversely, Citigroup (+3.1%) reached a record since August 2022 after Wells Fargo raised the price target for the bank.

IN ASIA

The Tokyo Stock Exchange remained closed due to a public holiday in Japan.

In China, the stock markets closed in disorganized order after already a session in the red the day before, against a backdrop of uncertainties over the Chinese economic recovery.

The CSI 300 index fell 0.24% while the Shanghai Stock Exchange Composite Index gained 0.17%.

In Hong Kong, the Hang Seng lost 0.92%.

EXCHANGES/RATES

The return of caution and the rise in bond yields favor the dollar which is moving close to a two-week peak compared to other reference currencies.

The euro stabilizes around 1.0950 after losing 0.95% the day before, its biggest daily decline since June.

On the bond market, the yield on ten-year Treasuries increased by more than two basis points, to 3.9668% after having climbed the day before to 4.02% during the session.

Its German equivalent, benchmark for the euro zone, also advances by two basis points, to 2.086%.

OIL

Crude prices are consolidating after their gains the day before linked to tensions in the Red Sea which raise fears of disruptions in supplies.

The barrel of Brent is unchanged at 75.88 dollars and that of American light crude (WTI) drops 0.11% to 70.3 dollars.

(Written by Blandine Hénault, edited by Jean-Stéphane Brosse)

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