by Claude Chendjou

PARIS (Reuters) – Wall Street is expected to rise slightly on Tuesday at the opening and the main European stock markets, apart from London, rebound timidly midway through a session without much conviction while awaiting inflation figures in the euro zone and in the United States at the end of the week.

New York index futures signal Wall Street opening up 0.01% for the Dow Jones, 0.08% for the Standard & Poor’s 500 and 0.17% for the Nasdaq.

In Paris, the CAC 40 nibbled 0.04% to 7,932.95 points around 12:00 GMT. In Frankfurt, the Dax advances by 0.37%. In London, the FTSE, the only main European stock market to have closed in the green on Monday, fell by 0.12%.

The pan-European FTSEurofirst 300 index lost 0.01%, while the eurozone’s EuroStoxx 50 rose 0.26% and the Stoxx 600 gained 0.03%.

The upward trend in Europe is fueled by basic resources which rebounded by 1.24% following their decline linked to fears about demand in a context of strengthening of the dollar.

Solid corporate results, particularly in France, are also contributing to the improvement in the stock markets.

But the fundamental concern of investors remains the evolution of central bank key rates while monthly data on inflation in the United States and the euro zone will be published respectively on Thursday and Friday.

Analysts say that if the PCE price figures in the United States suggest persistent inflation, as consumer price (CPI) and producer price (PPI) data in the country have shown recently, this could lead to a new revision of the timetable for the first rate cut by the American Federal Reserve (Fed).

According to the CME Group’s Fedwatch barometer, the probability of a Fed rate reduction in June is currently 63%, compared to 98% at the end of January. The probability of a drop in the cost of credit in July is 83.6%.

The same trend is observed in Europe where the European Central Bank (ECB) will hold its next monetary policy meeting on March 7 and the Bank of England (BoE) on March 21, the day after that of the Fed.

“Rate cuts are now expected to come towards the end of the second quarter, rather than in March as previously planned, and the European Central Bank is expected to cut rates by 75 to 100 basis points this year, instead of the 150 basis points expected only a month ago,” predicts David Morrison, market analyst at Trade Nation.

VALUES TO FOLLOW AT WALL STREET

Kroger and Albertsons are to be watched as the FTC, the US Federal Trade Commission, and eight US states announced Monday evening that they were taking legal action to block their proposed $24.6 billion merger.

Zoom Video Communications jumped 10.8% in pre-market trading after the group’s announcement of a share buyback plan and the publication of fourth-quarter revenue above expectations.

VALUES IN EUROPE

On the CAC 40, Bouygues climbs 6.88% with the increase in its current operating profit in 2023, mainly driven by the contribution of Equans.

On the SBF 120, the better-than-expected annual results of GTT are also welcomed, with an increase of 10.38% in the stock.

Eurofins Scientific, on the other hand, lost 9.78% after 2023 results considered disappointing, while Seb lost 6.57% after the announcement of the sale of Peugeot Invest’s stake in the group.

Casino, with a surge of 34.24%, continues to benefit from the validation by the commercial court of its rescue plan.

Elsewhere in Europe, British asset manager ABRDN fell 1.79% due to a drop in profit in 2023 and a warning of further pressure on its margins.

Vodafone advances 2.54% while sources have reported that the British operator would probably hold a minority stake in an entity combined with Fastweb, the Italian division of Swisscom (-1.44%), in the event of a merger in Italy. This would allow Vodafone to not have to carry the debt of the new entity on its balance sheet.

RATE

Bond yields in the euro zone vary little on Tuesday after the sharp rise the day before as investors await new macroeconomic data.

That of the German Bund at ten years stands at 2.429%, practically stable.

In the United States, the yield on Treasuries of the same maturity fell slightly, by 2.5 basis points, to 4.2717%.

CHANGES

The dollar is struggling to find a clear direction (-0.06%) against a basket of reference currencies in a wait-and-see context.

The yen strengthens 0.27% to 150.29 per dollar after a stronger-than-expected inflation indicator in Japan, which reinforces the prospect that the Bank of Japan (BoJ) will end its negative rates by April.

The euro is trading at 1.0854 dollars (+0.06%) and the pound sterling at 1.2685 dollars (+0.02%).

OIL

The oil market is falling slightly as investors try to gauge the prospect of a ceasefire in the Gaza Strip, with US President Joe Biden hoping for a deal by next week.

Brent lost 0.45% to 82.16 dollars per barrel and American light crude (West Texas Intermediate, WTI) 0.43% to 77.25 dollars.

(Written by Claude Chendjou, edited by Sophie Louet)

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