by Claude Chendjou
PARIS (Reuters) – Wall Street is set to open lower on Thursday amid a wait-and-see attitude ahead of key U.S. macroeconomic data, while in Europe, excluding Frankfurt, major stock markets continued to slide at mid-session, with risk aversion dominating ahead of French legislative elections.
New York index futures point to a 0.18% drop in Wall Street for the Dow Jones, 0.17% for the Standard & Poor’s 500 and 0.22% for the Nasdaq. Investors are awaiting the publication of the gross domestic product (GDP) for the first quarter, scheduled for 12:30 GMT, as well as the PCE price index figures, scheduled for Friday. These data are essential for trying to anticipate the trajectory of the US Federal Reserve’s rates.
In Paris, the CAC 40, weighed down by political uncertainty, fell by 0.65% to 7,559.55 points at around 11:25 GMT. In Frankfurt, the Dax resisted the downward trend, gaining 0.07%, thanks to real estate. In London, the FTSE fell by 0.30%.
The pan-European FTSEurofirst 300 index lost 0.27%, the EuroStoxx 50 of the euro zone 0.12% and the Stoxx 600 0.28%.
Tensions are being felt in the bond sector, where the yield on the ten-year French OAT has exceeded 3.26%, compared to a peak of 3.23% for its Portuguese equivalent. The first round of early legislative elections in France is scheduled for Sunday in a very polarized vote. A new televised debate is to pit the leaders of the three main coalitions against each other in the evening, while polls show the National Rally (RN) in the lead, ahead of the left-wing alliance and the presidential majority.
“In Europe, there is political uncertainty that limits any upside potential ahead of the French elections,” said Fiona Cincotta, market analyst at City Index. In terms of sectors in Europe, retail (-1.95%) and basic resources (-0.73%) are suffering after disappointing results from H&M and the downgrade from Anglo American.
VALUES TO FOLLOW ON WALL STREET
Micron Technology fell 6.8% in pre-market trading after a revenue forecast for the current quarter considered disappointing. In the wake of Micron, Nvidia, Arm Holdings, Qualcomm and Advanced Micro Devices fell from 0.8% to 1.1%.
VALUES IN EUROPE
OVHcloud jumped 10.42% after reporting quarterly turnover on Thursday that was up more than expected.
Kering gained 3.73%, with BofA Global Research moving from “underperform” to “buy” on the luxury group.
Anglo American drops 1.22% with Berenberg’s decision to lower its recommendation on the stock to “sell” from “hold”, citing concerns over the group’s new strategic plans.
H&M plunged 12.72% after reporting second-quarter profit on Thursday that missed expectations and warned of a drop in sales in June, casting doubt on its annual operating margin target.
RATE
Eurozone government bond yields hit their highest levels in two weeks on Thursday as investors eagerly awaited inflation data from the United States and several European countries (France, Spain and Italy).
The ten-year German Bund yield is up, at 2.464%, while the gap with its French equivalent of the same maturity climbs by more than seven basis points (bps), to 79.9 bps.
In the United States, the yield on ten-year Treasury bills is also increasing, to 4.3294%, while the probability of a Fed rate cut in September is only 56%. Investors are also watching the first debate between Joe Biden and Donald Trump which will take place overnight from Thursday to Friday.
CHANGES
The dollar fell 0.14% against a basket of benchmark currencies but remained close to the nearly two-month high reached Wednesday at 106.13 points.
The euro advanced 0.19%, to $1.0699, but is heading towards a loss of 1.4% over the month as a whole.
The yen stagnated on Thursday near its lowest level in 38 years, at around 160 per dollar, continuing to fuel the hypothesis of intervention by the Japanese authorities.
OIL
Oil prices rose slightly, with the risks of a supply disruption amid growing geopolitical tensions in the Middle East offsetting demand fears following a surprise rise in US crude stocks.
Brent rose 0.48% to $85.66 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.42% to $81.24.
(Written by Claude Chendjou, edited by Blandine Hénault)
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