by Pauline Foret
(Reuters) – Wall Street is expected to remain hesitant on Wednesday after rallying for more than a week and European stocks continued their cautious advance at mid-session, as investors prepare to digest the minutes of the latest Federal Reserve meeting, which are due to be published later in the day.
New York index futures point to a lower opening for Wall Street. The Dow Jones is seen up 0.13%, while the Standard & Poor’s 500 is expected to remain flat and the Nasdaq is expected to edge down 0.07%.
In Paris, the CAC 40 gained 0.33% to 7,510.56 points at around 09:30 GMT. In Frankfurt, the Dax advanced 0.34% and in London, the FTSE rose 0.15%.
The pan-European FTSEurofirst 300 index rose 0.24%, the eurozone’s EuroStoxx 50 rose 0.37% and the Stoxx 600 rose 0.25%.
On the markets, the summer was marked by see-saw volatility following the publication of disappointing data on the US jobs market, revised figures for which should be published later today.
Last week, however, the release of U.S. retail sales figures reassured investors about the state of the world’s largest economy, sparking a rally in stocks that lasted more than a week.
Now, markets are holding their breath awaiting the release of the minutes from the Fed’s July meeting later today, as well as Jerome Powell’s speech at the Jackson Hole symposium on Friday.
The minutes of the meeting could reassure investors about the possibility of a “soft landing”, cushioned by a less aggressive cut in key rates than previously expected.
Futures contracts have already priced in the possibility of a 25 basis point rate cut next month, while analysts had previously expected a 50 basis point cut. A cut of nearly 100 basis points is expected this year, followed by another 100 basis points next year.
Ross Yarrow, head of U.S. equities at investment bank Baird, said this is a potentially unique situation: significant rate cuts in an economy that is not in recession, a contrast to previous rate cuts.
“If we have a scenario where the Fed cuts rates, inflation goes down and employment continues to rise, it really starts to look like a Goldilocks scenario,” Yarrow said.
“So I think the rebound in stocks and their outlook from here is pretty good,” he added. STOCKS TO FOLLOW ON WALL STREET
Target is set to report second-quarter earnings. Shares are up 3% premarket.
Keysight Technologies reported better-than-expected third-quarter results on Wednesday, and shares jumped more than 11% in premarket trading.
Walmart is looking to raise up to $3.74 billion by selling its 5.2% stake in Chinese e-commerce company JD.COM, Bloomberg News reported Tuesday. JD.com’s U.S.-listed stock fell 7% before the open.
VALUES IN EUROPE
Eye care specialist Alcon fell 2.5% after reporting second-quarter results that missed expectations.
Grifols gained 6% after Bloomberg reported that Brookfield has asked banks to guarantee up to $10 billion for the potential private takeover of the Spanish pharmaceutical group.
Watkin Jones fell 30% after missing second-quarter profit forecasts.
RATE
Yields are steady ahead of further clues on the Fed’s decision on the future of US monetary policy.
The yield on ten-year Treasuries was stable at 3.8161%, compared to 4.0002% for the two-year yield.
The yield on the German ten-year bond is also stagnating at 2.2180%, compared to 2.3970% for the two-year bond.
CHANGES
Despite a slight rise in the dollar, earlier losses in the US currency caused by speculation over policy rates allowed the euro to float around $1.11 for the first time this year on Tuesday.
The dollar gained 0.04% against a basket of benchmark currencies, stabilizing after several days of consecutive losses.
The euro lost 0.06% to 1.1123 dollars.
The pound also lost 0.06% against the dollar, but gained 0.03% against the euro.
OIL
Oil is enjoying a brief respite on Wednesday after a series of declines caused by lingering concerns about Chinese demand and the possibility of a ceasefire in Gaza.
Brent recovered 0.03% to $77.22 per barrel, while US light crude (West Texas Intermediate, WTI) posted a very slight drop of 0.03% to $73.15.
(Written by Pauline Foret, edited by Kate Entringer)
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