by Claude Chendjou

PARIS (Reuters) – Wall Street is expected to fall slightly on Monday and the European stock markets are on a hesitant note at mid-session in a context of lowering expectations of a reduction in interest rates and after the publication of PMI activity mixed in the euro zone. New York index futures signal Wall Street opening down 0.12% for the Dow Jones, 0.17% for the Standard & Poor’s 500 and 0.10% for the Nasdaq.

In Paris, the CAC 40 advanced 0.14% to 7,602.8 points around 11:50 GMT. In London, the FTSE gained 0.43%, driven by the defensive “utilities” compartment. In Frankfurt, the Dax gained 0.27% but remained behind its historic peak at 17,004.55 points reached Friday during the session.

The pan-European FTSEurofirst 300 index rose by 0.26% and the eurozone’s EuroStoxx 50 by 0.25%. The Stoxx 600 gained 0.29%, getting closer to its record recorded Friday during the session at 487.66 points.

However, the trend is uncertain on the equity markets in Europe where the indices fluctuate within a narrow range due in particular to tensions in the bond compartment. Data published Friday on the labor market in the United States showed a sharp acceleration in job creation in January, calling for key rates to be maintained at their current level for a longer period.

The Chairman of the US Federal Reserve (Fed), Jerome Powell, said in an interview broadcast on CBS on Sunday evening that the central bank can be “cautious” in deciding when to cut interest rates, so that the solidity of the economy allows central bankers to have time to be certain that inflation will continue to fall.

In the euro zone, markets are now counting on a 125 basis point cut in rates from the European Central Bank (ECB) this year compared to around 140 points last week.

In addition to concerns about rates, the final PMI figures in the euro zone for the month of January, published in the morning, show a re-acceleration of inflationary pressures in services, but the economy is showing timid signs of recovery at the start of year with a composite index falling from 47.6 in December to 47.9 last month.

The market will take note at 3:00 p.m. GMT of the ISM for services in the United States where we expect an acceleration to 52.0 points after 50.5 in December.

VALUES TO FOLLOW AT WALL STREET

Caterpillar, seen as a good barometer of the U.S. economy, reported higher quarterly profit on Monday, supported by strong demand for its construction equipment amid rising infrastructure spending and a market rebound residential real estate in the United States. The stock advanced 2.2% in pre-market trading.

Boeing fell 2.2% in pre-market trading after new quality problems on its 737 MAX.

VALUES IN EUROPE

Atos fell 24.98% due to renewed concerns about the financial situation, the group having announced the abandonment of its capital increase.

Renault gains 1.34% on information of a possible merger with Stellantis (-0.49%). But the president of the Franco-Italian-American group, John Elkann, refuted the existence of such a project on Monday.

UniCredit soars 9.71% after reporting a stronger than expected increase in its 2023 profit on Monday and promising to match this result this year.

Santander (-4.95%) and Lloyds (-0.67%) are in the red in reaction to a report from the Financial Times according to which Iran used bank accounts in the United Kingdom of the two banks to secretly move money across the world as part of a vast plan to circumvent sanctions against Tehran.

Vodafone fell (-0.24%) after the announcement of “active discussions” in Italy while the British group rejected at the end of January Iliad’s proposal to merge their activities in the country.

RATE

The yield on ten-year Treasuries rises around five basis points, to 4.0829% after Jerome Powell’s call for caution.

“For the moment, central banks are in risk management mode and they are ready to be patient,” underlines Rohan Khanna, head of rates strategy at Barclays. The yield on the ten-year German Bund, the benchmark for the entire euro zone, rose by a little more than four basis points, to 2.278%.

EXCHANGES The dollar rose 0.18% on Monday against a basket of reference currencies, to a two-month high, after reaching 104.17 points.

The euro fell by 0.26%, to 1.0756 dollars, close to a low since mid-December.

The pound sterling stands at $1.25825 (-0.40%), a two-week low.

OIL

The oil market fell again on Monday despite a decline of around 7% over the whole of last week after the strength of American employment figures which took precedence over geopolitical tensions while the United States continues to carry out strikes against the Houthis in Yemen.

Brent lost 0.36% to $77.05 per barrel and American light crude (West Texas Intermediate, WTI) lost 0.48% to $71.93.

(Written by Claude Chendjou, edited by Blandine Hénault)

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