by Claude Chendjou

PARIS (Reuters) – The main European stock markets are expected to be on a cautious note on Tuesday before the publication of US inflation figures, a statistic particularly watched by the markets to predict the trajectory of key rates.

According to the first available indications, the Parisian CAC 40 should lose 0.04% at the opening and the Dax in Frankfurt 0.18%. The FTSE 100 in London could gain 0.07%. The EuroStoxx 50 index is expected to fall by 0.21%.

The main economic indicator of the week, the Consumer Price Index (CPI) in the United States for the month of January will be published at 1:30 p.m. GMT. The Reuters consensus forecasts an unchanged figure on a monthly basis (+0.2%) and a deceleration on an annual basis (+2.9%).

However, an acceleration in the CPI cannot be ruled out, said Charu Chanana, head of foreign exchange strategy at Saxo, which could push up yields and further strengthen the dollar.

“The probability of a rate cut in May is around 70% and it seems possible to push this timetable out to June, with markets remaining sensitive to hawkish surprises for now,” she said.

CPI data for the UK are due on Wednesday and those for the entire Eurozone on February 22. Last week, several central bankers, notably within the American Federal Reserve (Fed), insisted that an imminent reduction in key rates should not be expected.

The Italian Fabio Panetta, member of the governing council of the European Central Bank (ECB), however estimated on Monday that a change of pivot was fast approaching, which pushed back bond yields in the euro zone, which had gained last week almost 15 basis points.

In addition to inflation, the session will be marked by other indicators such as employment in the United Kingdom, economic sentiment in Germany and the euro zone, as well as quarterly company publications, including those of Coca-Cola and Hasbro.

A WALL STREET

The New York Stock Exchange ended in disarray on Monday after a session marked by a certain wait-and-see attitude.

The Dow Jones index gained 0.33%, or 125.69 points, to 38,797.38 points.

The broader S&P-500, on the other hand, lost 4.77 points, or 0.09%, to 5,021.84 points.

The Nasdaq Composite also fell by 48.12 points (-0.30%) to 15,942.55 points, after having briefly exceeded at the start of the session its closing record dating from November 2021, less than one percentage point from its all-time intra-day high of 16,212.229 points.

In stocks, Diamondback Energy jumped more than 9% after announcing the purchase of Endeavor Energy Resources, the largest unlisted oil and gas producer in the Permian Basin, in a cash and stock transaction of approximately $26 billion, including debt.

Nvidia overtook Amazon in terms of market capitalization during the session, as euphoria around artificial intelligence propelled the chipmaker to the fourth place among the most valuable American companies. Nvidia ended the day very slightly up, while Amazon fell more than 1%.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index advanced 3.01% to 38,006.44 points, supported by the weakness of the yen which allowed it to reach a new 34-year high. The broader Topix gained 2.12%, to 2,612.03 points, at the close.

The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) gained 0.15% but has fallen by 3% since the start of the year.

Markets in China are closed again due to the Lunar New Year holiday and will not reopen until Monday, February 19. Trading in Hong Kong is due to resume on Wednesday.

EXCHANGES/RATES

The dollar gains 0.03% against a basket of reference currencies before the American inflation figures.

The euro lost 0.04%, to 1.0767 dollars and the pound sterling traded at 1.2616 dollars (-0.08%).

The yen is flirting with the 150 mark to the dollar, a level which analysts say could trigger intervention by Japanese authorities to support the country’s currency.

In cryptocurrencies, bitcoin strengthened further, by 0.64%, to 50,155 dollars, after having exceeded the threshold of 50,000 dollars for the first time in more than two years on Monday.

The yield on ten-year US Treasury bonds is stable at 4.1773%, after a decline of less than two basis points the day before.

OIL

Geopolitical tensions in the Middle East continue to support oil prices but uncertainties over the timing of the Fed’s rate cut and its impact on crude demand are limiting gains.

Brent rose 0.16% to $82.13 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.25% to $77.11.

(Written by Claude Chendjou, edited by Zhifan Liu)

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