by CORENTIN CHAPRON

(Reuters) – The main European stock markets are expected to decline at the opening on Tuesday, the markets positioning themselves for new interventions from monetary policy makers, after several restrictive comments on Monday.

Futures contracts suggest an opening down 0.35% for the Parisian CAC 40, compared to 0.28% for the FTSE in London, 0.63% for the Dax in Frankfurt, and 0.67% for the EuroStoxx 50.

The speech by Christopher Waller, member of the Board of Governors of the Federal Reserve, which will be held at 4:00 p.m. GMT, is one of the main events in a week poor in indicators and interventions by monetary policy makers.

The governor, who favors a restrictive monetary policy, will discuss the American economic outlook, while the markets are positioned for a significant cut in Fed rates in 2024.

In the eurozone, François Villeroy de Galhau, member of the board of governors of the European Central Bank, is expected to speak at the World Economic Forum in Davos.

On Monday, Joachim Nagel and Robert Holzmann, members of the ECB’s governing council, warned on Bloomberg TV that it was too early to lower interest rates. On Saturday, the ECB’s chief economist, Philip Lane, recalled in an interview with the Italian daily Il Corriere della Sera that a too rapid drop in rates could trigger a new wave of inflation.

In Germany, HICP inflation was confirmed at 3.8% year-on-year in December. Investors will follow the ZEW sentiment indicator at 10:00 GMT.

The markets are also awaiting Chinese GDP figures overnight from Tuesday to Wednesday, which could confirm that the Chinese economy has achieved its growth targets set by the government in 2023.

A WALL STREET

American markets were closed Monday on the occasion of Martin Luther King Day.

IN ASIA

The Tokyo Stock Exchange closed lower on Tuesday, ending a series of six consecutive sessions of gains that had brought the Nikkei index to its highest level in 34 years. The Nikkei index lost 0.79% to 35,619.18 points and the broader Topix lost 0.81% to 2,504.10 points.

Online gaming company Nexon, Dai Nippon Printing Group and entertainment company Toho posted the biggest declines on the Nikkei, dropping 4.73%, 3.47% and 3.81% respectively.

Mainland Chinese stock markets ended slightly higher as investors remained cautious ahead of the release of GDP figures on Wednesday. The Shanghai SSE Composite gained 0.27% and the CSI 300 0.61%.

In Hong Kong, the Hang Seng index fell by 1.88%.

RATE

US yields rose ahead of Fed Governor Christopher Waller’s intervention, and after the publication of a Wall Street Journal article suggesting the Fed could reduce its pace of quantitative tightening.

The ten-year Treasury yield rose 5.1 bps to 4.0011%, while the two-year rate rose 7.1 bps to 4.209%.

In Europe, the German ten-year yield increased by 1.8 bp to 2.217%, while that of the two-year rate rose by 1.4 bp to 2.603%.

CHANGES

The dollar is clearly rising, with investors positioning themselves ahead of comments from central bankers.

The dollar jumped 0.49% against a basket of reference currencies, while the euro lost 0.34% to 1.0911 dollars, and the pound sterling 0.49% to 1.2663 dollars.

In Asia, the yen fell 0.31% to 146.18 yen per dollar, while the Australian dollar fell 0.75% to 0.661 dollars.

OIL

Oil prices are hesitating, after falling the day before, torn between supply concerns in the United States due to weather conditions and persistent tensions in the Middle East.

Brent is up 0.22% to $78.32 per barrel while American light crude (West Texas Intermediate, WTI) erodes 0.14% to $72.58 per barrel.

(Written by Corentin Chappron, edited by Blandine Hénault)

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