PARIS(Reuters) – European stock markets are expected to open hesitantly on Tuesday, with the state of the U.S. economy and the trajectory of interest rates across the Atlantic remaining the main source of uncertainty for investors.
Futures contracts suggest an opening increase of 0.03% for the Parisian CAC 40, against a decline of 0.39% for the FTSE in London, a rise of 0.09% for the Dax in Frankfurt and 0.14% for the EuroStoxx 50.
Markets are in a wait-and-see mode, with no major economic indicators to animate Tuesday’s session.
A few elements are expected this week that could help provide direction. In the United States, the publication of the minutes of the last monetary policy meeting of the Federal Reserve will shed light on the debates that are animating the central bank, in a context of resilient activity but progressive weakening of the labor markets.
The Jackson Hole Symposium, the annual meeting of central bankers that begins Thursday, could provide further guidance on the path of U.S. rates.
PMI activity indicators will also be expected on Thursday, and will help to update the perception of activity in the world and in the euro zone in particular.
The real test, however, will be in September and the publication of the monthly report on American employment.
“After seeing this surprisingly resilient economic cycle survive so many shocks, the market is tense and worried that the whole edifice will collapse in the fall,” sums up Kit Juckes, chief currency strategist at Societe Generale.
“There are some danger signs – growth is very unbalanced, housing is in disarray and leading indicators are sending out warning signals – but overall, the data does not yet suggest a slowdown capable of justifying the rate cuts expected by markets,” the strategist adds.
Money markets are pricing in about 95 basis points of easing by year-end.
ON WALL STREET
The New York Stock Exchange closed higher Monday, extending its biggest weekly percentage gain of the year, as investors looked ahead to the Democratic National Convention, which will nominate Kamala Harris for president, and the annual Jackson Hole symposium.
The Dow Jones Industrial Average gained 0.6 percent, or 236.77 points, to 40,896.53. The broader Standard & Poor’s 500 gained 54 points, or 1.0 percent, to 5,608.25. The Nasdaq Composite gained 245.051 points, or 1.4 percent, to 17,876.771.
Advanced Micro Devices gained 4.5% after the chipmaker said it plans to acquire server maker ZT Systems for $4.9 billion to expand its artificial intelligence portfolio and better compete with industry giant Nvidia.
IN ASIA
Japanese stocks closed higher, following US indices, supported by the encouraging outlook for activity in the United States. The Nikkei index gained 1.8% to 38,062.92 points. The broader Topix gained 1.11% to 2,670.54 points.
Technology rebounded, with semiconductor manufacturing equipment specialist Tokyo Electron gaining 1.6% while artificial intelligence investor SoftBank added 3.3%.
Chinese stocks fell after the Chinese central bank left rates unchanged. Hong Kong’s Hang Seng Index fell 0.48%, Shanghai’s SSE Composite index fell 1.09%, and the CSI 300 fell 0.86%.
RATE
Yields vary little across the Atlantic, with no indicator giving any direction.
The 10-year Treasury yield rose 1.4 bps to 3.8806%, while the two-year yield was flat at 4.0677%.
The yield on the German ten-year bond is unchanged at 2.256%, while that of the two-year rate remains at 2.445%.
CHANGES
Foreign exchange markets are calm in the absence of a catalyst.
In Asia, the yen declined by 0.46% to 147.24 yen per dollar, the Australian dollar fell by 0.12% to 0.672 dollars.
The dollar gained 0.09% against a basket of benchmark currencies, the euro eroded 0.09% to $1.1075, and the pound sterling lost 0.05% to $1.2981.
OIL
Oil prices fell as Israeli Prime Minister Benjamin Netanyahu confirmed his support for the latest compromise proposals put forward by Washington in the Gaza ceasefire negotiations, according to US Secretary of State Antony Blinken.
Brent fell by 0.97% to $76.91 per barrel, while US light crude (West Texas Intermediate, WTI) weakened by 0.83% to $73.75.
(Written by Corentin Chappron, edited by Zhifan Liu)
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