by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected to rise slightly on Tuesday against a backdrop of falling bond yields as the American Federal Reserve (Fed) begins a two-day monetary policy meeting and a new round of major results companies is expected during the day.

According to the first available indications, the Parisian CAC 40 should gain 0.42% at the opening, which would allow it to exceed its historic peak of 7,653.99 points reached on December 14. The Dax in Frankfurt could rise by 0.32% and the FTSE 100 in London by 0.42%. The EuroStoxx 50 index is expected to rise by 0.26%.

The Fed must make its monetary policy decisions on Wednesday following two days of FOMC debate. While there is little doubt about a new status quo on federal funds rates, investors are waiting for more details from the central bank on the timetable for the first reduction in the cost of credit, with speculation varying between March and June.

In Europe, decisions from the Bank of England (BoE) are expected on Thursday after the European Central Bank (ECB) which decided last week to once again leave its key rates unchanged.

On the corporate results side, Microsoft, UPS, Pfizer and General Motors are due to publish their quarterly accounts this Tuesday while the market will learn this week of the publications of nearly 20% of S&P-500 companies.

Numerous macroeconomic indicators are also expected this week, including this Tuesday at 10:00 GMT the first estimate of the gross domestic product (GDP) of the euro zone in the fourth quarter and at 15:00 GMT the Jolts survey on job offers for UNITED STATES.

In France, the economy stagnated in the fourth quarter of 2023 compared to the previous three months, in a context of weak domestic demand, according to the first estimate from INSEE. Over the year 2023, French growth stood at 0.9%, compared to a gain of 2.5% in 2022 and 6.4% in 2021.

A WALL STREET

The New York Stock Exchange ended with a small increase on Monday, in a context of wait-and-see attitude linked to the Fed and the publication of the results of “tech” heavyweights.

The Dow Jones index gained 0.59%, or 224.02 points, to 38,333.45 points. The broader Standard & Poor’s 500 gained 36.96 points, or 0.76% to 4,927.93 points. The Nasdaq Composite advanced 172.68 points (1.12%) to 15,628.044.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index advanced 0.11% to 36,065.86 points, supported by stocks linked to semiconductors such as Advantest (+1.69%), Shin-Etsu Chemical (+3, 03%). The broader Topix lost 0.1% to 2,526.93 points at the close.

In the rest of Asia, investors are digesting the decision of a Hong Kong court to order the liquidation of the developer China Evergrande Group and its impact on the real estate market.

The Hang Seng index of the Hong Kong Stock Exchange fell by 1.7%, while the real estate sector fell by 3%.

The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) lost 0.40%.

In China, the Shanghai SSE Composite fell 1.81%, heading towards a loss of almost 4% for the month as a whole. The CSI 300 index dropped 1.71%.

VALUES TO FOLLOW IN EUROPE:

EXCHANGES/RATES

The dollar is moving in a narrow range (+0.11%) against a basket of reference currencies while awaiting the Fed and statistics on the labor market.

The euro fell by 0.19%, to 1.0812 dollars, while the pound sterling stood at 1.2686 dollars (-0.17%).

On the bond market, the yield on ten-year US Treasury bonds, which lost eight basis points on Monday, contracted further by more than four points, to 4.0433%. The market currently expects the Fed to cut rates by 134 points this year.

The yield on the ten-year German Bund, the benchmark for the euro zone, stands at 2.203%, down slightly, after having lost almost six points the day before.

OIL

The oil market rebounded slightly on Tuesday after a decline of more than 1% the day before, the worsening of geopolitical tensions in the Middle East rekindling fears over supply.

Brent rose 0.3% to $82.65 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.4% to $77.09.

(Written by Claude Chendjou, edited by Jean-Stéphane Brosse)

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