by Diana Mandia

PARIS (Reuters) – Major European stock markets are expected to open higher on Monday, buoyed by hopes that this week’s meetings of the U.S. and British central banks will pave the way for rate cuts, and ahead of another week of corporate results.

According to the first available indications, the Parisian CAC 40 could gain 0.5% at the opening.

Futures are signaling a rise of 0.47% for the Dax in Frankfurt, 0.33% for the FTSE in London and 0.33% for the EuroStoxx 50.

The week will be dominated by meetings of major central banks, particularly in the United States, Japan and Britain, where monetary policymakers are due to comment on interest rate developments and whose comments on future plans will again be closely watched.

In the United States, where the Federal Reserve (Fed) is due to speak on Wednesday, investors are expecting the status quo, while believing that the time to ease monetary policy is approaching, given signs of slowing inflation and the labor market. Market participants anticipate a rate cut in September with a probability of more than 90%.

Last week’s US PCE inflation data, the most closely watched by the Fed, did not challenge this scenario.

The U.S. jobs report, due on Friday, will give investors an opportunity to assess any signs of easing labor market tensions.

“The FOMC (Federal Open Market Committee) is expected to remain on hold, but is likely to revise its statement to suggest that a taper at the next meeting in September has become more likely,” Goldman Sachs analysts wrote in a note.

The Bank of Japan also meets on Wednesday, and markets are pricing in a 70% chance it will raise rates by 10 basis points.

Investors are less certain that the Bank of England (BoE) will ease rates at its meeting on Thursday.

In the eurozone, where the European Central Bank (ECB) cut borrowing costs for the first time in June before opting for a pause in July, investors will be looking at two key indicators this week: eurozone economic growth and inflation figures.

The week also promises to be rich in corporate results, with big names such as L’Oréal, Microsoft, Meta, Lufthansa, Société Générale and Crédit Agricole publishing their half-year figures in the coming days. The technology sector will be in particular focus, as the rally seen since the beginning of the year begins to fade.

VALUES TO FOLLOW:

A WALL STREET

The New York Stock Exchange ended higher on Friday, driven by the recovery of large American technology capitalizations and the PCE inflation figure.

The Dow Jones Industrial Average gained 1.6%, the broader S&P 500 gained 1.05% and the Nasdaq Composite advanced 0.85%.

Over the week, the S&P-500 lost 0.83% and the Nasdaq 2.08%.

IN ASIA

In Tokyo, the Nikkei rose 2.6% after plunging to a three-month low on Friday, helped by the rebound on Wall Street thanks to US inflation figures, which reinforced hopes of a Fed rate cut in September.

In China, stocks were relatively flat on Monday as investors awaited a key meeting of China’s Politburo later in the week, which is expected to shed light on China’s actions following reform plans outlined at the CCP’s third plenum a fortnight ago.

The Shanghai Composite Index gained 0.14% and the CSI 300 of large capitalizations fell 0.34%.

The Hong Kong Stock Exchange rose 1.81%.

RATES / EXCHANGES

In the bond market, the yield on ten-year Treasuries is down slightly by 2.2 basis points to 4.1783% before the Fed meeting.

The foreign exchange market was fairly stable, with the dollar down 0.06% against a basket of benchmark currencies, while the euro gained 0.04% to $1.0860.

OIL

Fears of an escalation of the Middle East conflict after a rocket attack on the Israeli-occupied Golan Heights, which Prime Minister Benjamin Netanyahu’s government blames on Lebanon’s Hezbollah, are pushing up oil prices.

Brent gained 0.52% to $81.55 per barrel and light American crude (West Texas Intermediate, WTI) gained 0.45% to $77.51.

NO MAJOR ECONOMIC INDICATORS ON TODAY’S AGENDA

(Written by Diana Mandiá, edited by Blandine Hénault)

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