by CORENTIN CHAPPRON

PARIS (Reuters) – Wall Street is expected to open higher on Monday, while European markets are up mid-session ahead of many indicators this week and after U.S. President Joe Biden withdrew from the presidential election.

New York index futures suggest Wall Street will open in the green, with the Dow Jones up 0.17%, while the Standard & Poor’s 500 gained 0.53% and the Nasdaq 0.85%.

In Paris, the CAC 40 rose 1.39% to 7,639.61 points at around 11:00 GMT. The Dax in Frankfurt gained 1.4%, compared to 0.77% for the FTSE in London.

The pan-European FTSEurofirst 300 index rose 1.14%, compared to 1.56% for the EuroStoxx 50 and 1.15% for the Stoxx 600.

Markets are preparing for another busy week of releases, with several key economic indicators due to be released in the coming days, while the monetary outlook remains at the heart of market concerns.

PMI indicators for July will be released on Wednesday, while US second-quarter GDP is due on Thursday.

U.S. PCE inflation, the week’s main indicator, is due out on Friday, and could encourage investors to bet on further rate cuts, as statements last week by several U.S. monetary policymakers raised hopes of easing in the near future.

The next Fed meeting on July 31 will be key in determining the next path of rates.

Furthermore, the withdrawal of the outgoing American president, Joe Biden, from the November presidential election slightly changes the situation for the markets, which had adjusted last week to a possible victory for the Republican candidate Donald Trump.

Assets affected by the “Trump trade” could therefore react this week with American political developments, with investors having positioned themselves for an increase in public spending and a much more protectionist economic policy, which would have weighed on European companies.

The results also stimulate discussions.

“A fairly strong rotation movement has begun, benefiting in particular the most discounted stocks which could benefit from the upcoming monetary easing. The major American tech stocks have thus been abandoned,” note the LBPAM strategists.

“Nevertheless, in a phase of easing of the monetary stranglehold, and the continuation of economic growth, it would be normal to see small capitalizations perform well,” they note.

VALUES TO FOLLOW ON WALL STREET

NXP Semiconductors and Verizon Communications will report results on Monday.

Nvidia is developing a version of its artificial intelligence (AI) chip that meets U.S. criteria for export to China, Reuters reported on Monday.

VALUES TO FOLLOW IN EUROPE

Icade is up 3.83% after announcing on Monday that its net loss had narrowed to 180.5 million euros in the first half, thanks to the effect of a smaller variation in the value of investment properties compared to the same period last year.

Valneva gains 4.88% after securing new funding for its chikungunya vaccine.

Ryanair plunged 13.96% after reporting a 46% drop in first-quarter after-tax profit on Monday and warning that summer fares would be “substantially lower” than last year.

Varta shares plummeted 70.64% as the German battery maker announced it was discussing two restructuring scenarios that could lead to a stake being taken by Porsche.

Ocado climbed 8.78% after its US partner Kroger placed an order for a wide range of new automated technology for its warehouses.

Rentokil Initial shares rose 11.22% as the Sunday Times reported that former BT boss Philip Jansen is in talks to buy the British hygiene services specialist.

Entain rose 4.47% after announcing on Monday that Gavin Isaacs would take over as CEO from September 2.

RATE

Yields are hesitant in the absence of a macroeconomic catalyst.

The yield on the German ten-year bond is stable at 2.461%, while that of the two-year rate has increased by 1.3 bp to 2.79%.

The yield on the 10-year Treasury fell 1.6 bp to 4.2233%, while the two-year gained 1.2 bp to 4.5192%.

CHANGES

Currencies are slightly fluctuating ahead of the release of key economic indicators in Europe and the United States this week.

The dollar fell 0.16% against a basket of reference currencies, the euro gained 0.1% to 1.0888 dollars, and the pound sterling 0.15% to 1.2938 dollars.

OIL

The barrel is falling despite the unexpected drop in interest rates in China, the markets digesting the implications of Joe Biden’s withdrawal from the presidential election and the results of the last Chinese plenum, which concluded without major announcements of support for the economy.

Brent crude fell by 0.28% to $82.4 per barrel, while US light crude (West Texas Intermediate, WTI) declined by 0.22% to $79.95.

(Written by Corentin Chappron, edited by Augustin Turpin)

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