by Diana Mandia

PARIS (Reuters) – Major European stock markets are expected to open cautiously higher on Tuesday, with a wait-and-see attitude remaining ahead of the publication of many key indicators for the path of monetary policy easing and with results from artificial intelligence giant Nvidia expected later this week.

Index futures suggest an opening up 0.08% for the Paris CAC 40, 0.07% for the Frankfurt Dax, 0.34% for the London FTSE, which reopens after a public holiday, and 0.06% for the EuroStoxx 50.

Stock markets are likely to remain cautious again on Tuesday, with investors awaiting the release of euro zone inflation figures for August and the US PCE price index for July on Friday, which will provide further clues on the likely path of monetary policy on both sides of the Atlantic.

The market is particularly trying to assess the prospect of a drop in interest rates in the United States in September following the comments by Jerome Powell, the chairman of the American Federal Reserve (Fed), at the Jackson Hole symposium.

Market participants expect a 25 basis point cut next month, and a 100 basis point easing over the next three meetings this year.

“With the Fed now firmly in the driver’s seat, markets will be watching the data closely,” said Gary Dugan, managing director of the Global CIO Office.

In the eurozone, markets estimate a 25 basis point rate cut at the European Central Bank’s next monetary policy decision on September 12 as 90% likely.

In addition to these crucial indicators, the second estimate of the US gross domestic product (GDP) for the second quarter will be released on Thursday and Nvidia’s results, which will give investors clues about the sustainability of the craze for artificial intelligence stocks, will be on the agenda on Wednesday.

Geopolitical fears related to the situation in the Middle East also call for caution.

VALUES TO FOLLOW:

Investors will be watching how European markets react to disappointing results from Chinese group PDD Holdings, owner of e-commerce platform Temu, which highlighted weak demand from Chinese consumers.

European luxury goods companies have also been hit by falling consumer spending in the world’s second-largest economy.

A WALL STREET

The major New York Stock Exchange indexes, except the Dow, ended lower on Monday as investors awaited key economic data, which could provide clues about Fed rate cuts, as well as earnings from technology giant Nvidia.

The Dow Jones Industrial Average gained 0.16%, the broader Standard & Poor’s 500 lost 0.32% and the Nasdaq Composite fell 0.85%.

Nvidia, the flagship artificial intelligence stock whose results will be known on Wednesday at the close of trading on Wall Street, fell by 2.25%, while some investors fear that the results of the second capitalization of the New York Stock Exchange, if they do not turn out to be excellent, will weigh on the rally that Wall Street is experiencing thanks to companies linked to AI.

IN ASIA

Asian markets were cautious Tuesday amid geopolitical tensions as investors bet on upcoming U.S. rate cuts. Technology stocks were also hurting in the wake of Wall Street as results from e-commerce giant PDD Holdings, the parent company of Temu, disappointed investors.

The pause in the rise of the yen, however, supported export-related values.

In Tokyo, the Nikkei gained 0.47% on Tuesday to 38,288.62 points after turning higher towards the end of the session.

In China, the Shanghai Stock Exchange composite index fell by 0.19% and the CSI 300 of large capitalizations lost 0.58%.

The Hong Kong Stock Exchange is up 0.31%.

Canada’s announcement of 100% customs duties on electric vehicles imported from China is also weighing on manufacturers’ shares.

RATES / EXCHANGES

The yield on ten-year Treasuries rose 0.7 basis points to 3.8254%, while that of the German Bund of the same maturity rose 0.9 basis points to 2.2570%.

In France, where President Emmanuel Macron on Monday ruled out the possibility of a government led by the New Popular Front (NFP), the yield on the ten-year OAT rose 1.4 basis points to 2.9690%.

On the foreign exchange market, the dollar is stable against a basket of reference currencies, while the euro gains 0.05% to 1.1167 dollars.

OIL

Oil prices were hesitant on Tuesday after jumping more than 7% in the previous three sessions due to tensions in the Middle East and the closure of Libyan oil fields.

Brent gained 0.02% to $81.45 per barrel and US light crude (West Texas Intermediate, WTI) fell 0.1% to $77.34.

(Written by Diana Mandiá, edited by Augustin Turpin)

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