PARIS (Reuters) – European stock markets are expected to open slightly lower on Monday as investors position themselves for rate cuts from the Federal Reserve at the start of a week rich in indicators.

Futures suggest a stable opening for the Paris CAC 40, against a decline of 0.22% for the Dax in Frankfurt, and a drop of 0.2% for the EuroStoxx 50.

The FTSE in London is closed on Monday for a public holiday.

Markets are digesting the latest comments from Federal Reserve Chairman Jerome Powell, who spoke at the Jackson Hole symposium on Friday.

“Jerome Powell said the economy continues to grow at a solid pace, but he made it clear that the focus is now on jobs, not inflation,” Rabobank strategists summarize.

Above all, if the monetary policy manager assured that the “time (had) come for the Fed to lower its rates, he refrained from specifying the extent of this first reduction, 25 or 50 basis points (bp).

Money markets are expecting 35bp of easing in September, pricing in about a 50bp cut.

The many indicators expected this week will help investors to clarify their rate expectations, in Europe and in the United States.

In the United States, durable goods on Monday, the second estimate of second-quarter GDP on Thursday, and especially PCE inflation for July on Friday, will provide more information on activity across the Atlantic.

Nvidia’s figures will also be published on Wednesday, as investors are once again expecting figures that are well above consensus from the chip giant. A disappointment could be enough to trigger sales in the technology sector, given the group’s importance.

Adding to the pressure on European indices, European Central Bank chief economist Philip Lane said on Saturday that “the return of inflation to its target is not yet assured.”

European inflation for July is expected on Friday, and should continue to decline, according to the consensus.

VALUES TO FOLLOW:

ON WALL STREET

The New York Stock Exchange ended sharply higher on Friday after Jerome Powell’s speech in which he said it was time to cut Fed interest rates, citing growing risks to the jobs market and as inflation is on track to reach the 2% target.

The Dow Jones Industrial Average gained 1.14 percent, or 462.30 points, to 41,175.08. The broader Standard & Poor’s 500 gained 63.97 points, or 1.15 percent, to 5,634.61. The Nasdaq Composite Index gained 258.44 points, or 1.47 percent, to 17,877.794.

IN ASIA

Japanese stocks closed lower under pressure from the yen, which is strengthening against the dollar as investors position themselves for Fed rate cuts. The Nikkei index fell 0.66% to 38,110.22 points, while the broader Topix index lost 0.87% to 2,661.41 points.

Technology shares fell ahead of Nvidia’s results on Wednesday, with semiconductor equipment maker Tokyo Electron down 2.6% while rival Advantest fell 2.4%.

Chinese stocks are falling under pressure from the real estate sector. Hong Kong’s Hang Seng Index is up 0.8%, Shanghai’s SSE Composite is down 0.31%, and the CSI 300 is down 0.44%.

RATE

Yields erode ahead of new economic data on Monday and this week.

The 10-year Treasury yield declined 2.5 bps to 3.782%, while the two-year yield dropped 2.8 bps to 3.8851%.

The yield on the German ten-year bond is unchanged at 2.218%, while that of the two-year rate remains at 2.364%.

CHANGES

Foreign exchange markets are calm as investors position themselves for upcoming data due this week.

In Asia, the yen advanced by 0.27% to 143.98 yen per dollar, the Australian dollar lost 0.25% to 0.6775 dollars.

The dollar was stable against a basket of benchmark currencies, the euro was down 0.07% at $1.1182, and the pound sterling lost 0.07% to $1.32.

OIL

Fears of an escalation in the Middle East are supporting the barrel, which is also benefiting from the Fed’s more accommodating stance.

Brent rose 0.63% to $79.52 per barrel, while American light crude (West Texas Intermediate, WTI) rose 0.68% to $75.34.

(Written by Corentin Chappron, edited by Augustin Turpin)

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