by Blandine Henault

PARIS (Reuters) – The main European stock markets are expected to rise on Thursday at the opening, awaiting the monetary policy decision of the European Central Bank (ECB) which should make a first cut in interest rates after two years of drastic monetary tightening.

Futures contracts report an increase of 0.23% for the Parisian CAC 40, 0.24% for the Dax in Frankfurt, 0.11% for the FTSE in London and 0.27% for the Stoxx 600.

The trend is supported by the records reached the day before on Wall Street, in the wake of a jump in “tech” against a backdrop of expectations of a rate cut by the Federal Reserve (Fed) in September.

ADP’s jobs report, released Wednesday, showed that the U.S. private sector created fewer jobs than expected in May, adding to recent data suggesting the job market is not no longer so tense.

This has reinforced expectations around the Fed’s monetary policy: according to FedWatch, traders are currently betting 69% on a rate cut in September, compared to around 50% throughout the last week.

In Europe, a rate cut from the ECB is almost assured this Thursday but investors will especially monitor the comments of President Christine Lagarde while the trajectory of monetary policy is more uncertain at the end of the year.

VALUES TO FOLLOW:

The technology sector in Europe could benefit from the jump in the sector on Wednesday evening on Wall Street.

A WALL STREET

The New York Stock Exchange ended up on Wednesday, with the S&P-500 and the Nasdaq having set closing records, in the wake of gains in technology stocks, including Nvidia.

The Dow Jones index gained 0.25%, to 38,807.33 points. The broader S&P-500 gained 1.18% to 5,354.03 points and the Nasdaq Composite advanced 1.96% to 17,187.91 points.

Nvidia has progressed to reach the $3 trillion market capitalization threshold for the first time, overtaking Apple as the world’s second largest valuation.

Under the effect of gains in the heavyweight of artificial intelligence (AI), the semiconductor index gained 4.5%.

IN ASIA

The Tokyo Stock Exchange rose 0.55% driven by the rise in semiconductor values ​​in the wake of the sector’s progress on Wall Street.

In China, local stock exchanges operate in a dispersed order. The Shanghai Stock Exchange Composite Index fell 0.38% and the large-cap CSI 300 rose 0.1%.

The Hong Kong Stock Exchange takes 0.04%.

EXCHANGES/RATES

The euro is increasing against the dollar ahead of the decision of the European Central Bank (ECB) and the near certainty of a rate cut.

The dollar is at the same time weakened by expectations of monetary easing by the Fed later in the year, which pushed down bond yields on Wednesday.

The euro advanced 0.08% to 1.0877 dollars.

The greenback lost 0.04% against a basket of reference currencies.

The yield on ten-year Treasuries stabilized at 4.2987% after losing five basis points the day before and recording a fifth consecutive session of decline.

In Europe, the German Bund rate of the same maturity fell by almost two basis points, to 2.515%.

OIL

Expectations of the Fed’s rate reduction in September are boosting crude prices, but the rise is limited by the increase in weekly stocks in the United States and the decision of OPEC+ to relax its production reduction policy.

The barrel of Brent increased by 0.43% and that of American light crude (WTI) gained 0.57%.

(Written by Blandine Hénault; edited by Jean-Stéphane Brosse)

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