by Diana Mandia and Pauline Foret

PARIS (Reuters) – Major European stock markets are expected to open slightly higher on Thursday, with investors remaining cautious ahead of the European Central Bank’s (ECB) rate decision and after indices fell sharply the day before on concerns about possible U.S. restrictions on semiconductors.

According to the first available indications, the Parisian CAC 40 should open with a slight increase of 0.3%.

Futures are pointing to a 0.11% rise for the Dax in Frankfurt and 0.51% for the FTSE in London, while the EuroStoxx 50 is expected to open up 0.06%.

Investors’ attention turns to the ECB’s meeting on Thursday, which is expected to leave rates unchanged after announcing a first rate cut last month. Investors will be watching his comments to try to guess the timing of the next cut.

Market participants, however, expect the Frankfurt institute to remain cautious going forward, as inflation and wage growth remain stubbornly high.

Markets are pricing in two rate cuts in the remainder of 2024 and five by the end of next year.

Investors are also concerned about the prospect of a further escalation of trade tensions between the United States and China after Bloomberg reported that the Biden administration is considering unilaterally restricting exports to China of products made using American technology.

Geopolitical fears, combined with uncertainty over US policy towards Taiwan if Republican Donald Trump wins in November, led to a sharp correction in technology and semiconductor stocks in both Europe and the United States on Wednesday.

On the macroeconomic front, markets are also awaiting the publication of UK unemployment figures for May, as well as weekly jobless claims in the United States.

In corporate news, a new series of results are also on the agenda, including those from Volvo, Publicis and Novartis.

VALUES TO FOLLOW IN EUROPE:

Publicis raised its organic growth target for 2024 on Thursday.

Vinci announced on Wednesday that it had won a €2.9 billion contract for electrical conversion platforms in the North Sea.

Renault reported an increase in its sales volume in the first half of the year on Thursday.

Maurel et Prom reported on Thursday a 37% increase in its consolidated turnover in the first half.

A WALL STREET

The New York Stock Exchange ended mixed on Wednesday as investors feared an escalation in trade tensions between the United States and China.

The Dow Jones Industrial Average gained 0.6%, the broader S&P 500 lost 1.4% and the Nasdaq Composite fell 2.8%.

IN ASIA

The Tokyo Stock Exchange closed down 2.36%, weighed down by the decline in semiconductor stocks and as the appreciation of the yen fueled new rumors that the Japanese government had purchased nearly 6,000 billion yen last week.

In China, indices are up, with investors remaining cautious amid trade fears and awaiting decisions from the Chinese Communist Party’s plenum, which is expected to end later today.

The Shanghai Composite Index rose 0.33% and the CSI 300 of large caps advanced 0.45%.

The Hong Kong Stock Exchange gained 0.53%.

In Taiwan, semiconductor maker TSMC reported a 36% rise in second-quarter profit.

RATES/EXCHANGES

Bond yields rose in the United States after falling the day before in anticipation of a Fed rate cut in September.

The yield on ten-year Treasuries rose 2.3 basis points to 4.1691%.

The yield on the 10-year German Bund fell 0.3 basis points to 2.4180% ahead of comments from the European Central Bank. The dollar was flat (+0.01%) against a basket of benchmark currencies after falling on Wednesday on comments deemed dovish by Fed members on rates. The euro fell 0.04% to $1.0933.

OIL

Oil prices are rising as U.S. crude inventories fell more than expected last week.

Brent gained 0.49% to $85.50 per barrel and light American crude (West Texas Intermediate, WTI) gained 0.69% to $83.42.

(Written by Diana Mandiá and Pauline Foret, edited by Kate Entringer)

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