by Claude Chendjou

PARIS (Reuters) – After a mixed session on Tuesday, major European stock markets are expected to post a stronger rebound on Wednesday as investors gradually recover from Monday’s crash, triggered by a stronger yen and concerns over the state of the U.S. economy.

According to the first available indications, the Parisian CAC 40 should gain 1.24% at the opening. The Dax in Frankfurt could advance by 1.07%, while the FTSE 100 in London should gain 1.29%. The EuroStoxx 50 index is expected to increase by 1.26% and the Stoxx 600 by 1.15%.

European markets, which fell to a six-month low on Monday, struggled on Tuesday to regain some of the lost ground despite a rebound in Asia, particularly in Japan, where the current crisis originated.

Japanese leaders have since sought to calm investor concerns, with the prime minister calling for calm and the finance ministry, financial services agency and Bank of Japan (BoJ) holding a coordinated crisis meeting on Tuesday. The BoJ also sounded more cautious about further rate hikes on Wednesday, sending the yen sharply lower.

The selloff in Japanese stocks may be nearly over and the unwinding of yen carry trades may be nearing completion, according to JPMorgan analysts.

The renewed appetite for risk remains fragile, however, with the volatility indices on Wall Street VIX (27 points) and in Europe (25 points) still at high levels.

In terms of corporate results, the season continues with Siemens Energy, Commerzbank, Puma, Glencore, Novo Nordisk, Abn Amro, Warner Bros, Walt Disney, Hilton Worldwide, CVS Health and Lyft.

These publications are expected as there has recently been a rotation towards so-called “value” stocks in fear of an overvaluation of certain stocks, particularly technological ones.

“We have been highlighting the risk to growth stock valuations for some time… so in many ways the market moves are not a surprise, even if the speed of the rotation has been brutal,” writes Jon Bell, equity manager at Newton Investment Management.

A WALL STREET

The New York Stock Exchange ended higher on Tuesday, rebounding from a significant low the previous day, as investors appeared to be reassured by comments from officials at the US Federal Reserve (Fed) on the economic outlook.

The Dow Jones Industrial Average gained 0.76 percent, or 294.39 points, to 38,997.66. The broader S&P 500 gained 53.70 points, or 1.04 percent, to 5,240.03.

The Nasdaq Composite rose 166.77 points (1.03%) to 16,366.86 points.

U.S. central bank officials have dismissed the idea that disappointing July U.S. jobs data indicate a coming recession. They also warned that the Fed must cut interest rates to avoid such a scenario.

Nvidia gained nearly 4%, leading the S&P 500 and Nasdaq higher. Uber jumped 11% after beating Wall Street expectations for its quarterly results. Caterpillar also gained 3% after better-than-expected results.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index rose 2.98% to 35,715 points, supported by the depreciation of the yen. The broader Topix jumped 4.12% to 2,536 points.

The MSCI index of Asia and Pacific stocks (excluding Japan) gained 1.4%, while the South Korean Kospi advanced 2.5% and the Taiwan Stock Exchange gained 3.4%.

In China, the Shanghai SSE Composite gained 0.31% and the CSI 300 gained 0.20% after data showed that imports and exports in the second-largest economy increased in July.

VALUES TO FOLLOW IN EUROPE:

CHANGES/RATES

The dollar rose 0.34% against a basket of benchmark currencies, including the euro, which fell 0.18% to $1.0910, while the pound sterling traded at $1.2701.

The yen weakened 2.27 percent to 147.55 per dollar on Wednesday after BOJ Deputy Governor Shinichi Uchida told business leaders that the central bank would not raise interest rates when financial markets are unstable. The Japanese currency had hit a high of 141.675 on Monday, well off its July low of 161.96.

The yield on 10-year US Treasury bonds rose nearly three basis points on Wednesday to 3.9145%, compared to 3.667% on Monday, when the markets crashed.

OIL

The oil market is volatile, with concerns about falling global demand offsetting the risk of supply disruptions in the Middle East.

Brent rose 0.38% to $76.77 per barrel and US light crude (West Texas Intermediate, WTI) rose 0.44% to $73.52.

MAIN ECONOMIC INDICATORS ON THE AGENDA FOR AUGUST 7:

COUNTRY GMT INDICATOR PERIOD CONSENSUS PREVIOUS

FROM 06:00 Industrial orders June +1.0% -2.5%

– over one year nd -6.67%

FROM 06:00 June trade balance €23.5 billion €24.9 billion

(Written by Claude Chendjou, edited by Blandine Hénault)

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