by CORENTIN CHAPPRON

PARIS (Reuters) – Wall Street is expected to open lower on Wednesday, while Europe is down mid-session, as investors worry about the slowdown in the U.S. economy and the plunge in Nvidia.

New York index futures suggest Wall Street will open in the red, with the Dow Jones down 0.2%, the Standard & Poor’s 500 down 0.39% and the Nasdaq down 0.65%.

In Paris, the CAC 40 fell by 0.95% to 7,502.88 points at around 10:40 GMT. The Dax in Frankfurt fell by 0.71%, while the FTSE in London declined by 0.59%.

The pan-European FTSEurofirst 300 index lost 1%, the EuroStoxx 50 fell by 1.17% and the Stoxx 600 declined by 1%.

The latest ISM activity figures showed that activity remained in contraction in US manufacturing, with the new orders component falling further in August, suggesting that this weakening was set to continue.

The indicator is, however, of limited importance: the industrial sector represents only a small part of American activity, and observers were expecting figures close to those published on Tuesday.

In fact, the jobs report on Friday will likely be the most important indicator of September, and markets are nervous ahead of its release.

The Federal Reserve is now focusing on its full employment goal, and Friday’s figures will be key to determining the pace at which U.S. rates will be cut – but also to understanding whether a recessionary dynamic is already underway in the United States.

“The market is already pricing in strong support from the Fed, with a cut of more than 200bp in the key rate anticipated within a year. While such a cut is not impossible in the event of a marked deterioration in the US economy, it seems too aggressive to us in the absence of a recession,” summarize LBPAM’s strategists.

The release of the US job openings survey for July on Wednesday at 14:00 GMT adds to investor caution.

Adding to the market volatility, Nvidia fell nearly 10% on Tuesday as the chipmaker that has benefited from the rise of artificial intelligence (AI) is accused of possible anti-competitive practices. The group’s weight in U.S. indices is so significant that the S&P 500 on Tuesday suffered its biggest drop since the markets collapsed in early August.

VALUES TO FOLLOW ON WALL STREET

Salesforce announced Tuesday that it has reached an agreement to acquire Tenyx, which develops artificial intelligence-based voice agents.

VALUES TO FOLLOW IN EUROPE

Nvidia’s decline drags European technology stocks down with it. The technology sector is down 2.98%, the worst sector performance in the Stoxx 600 index.

STMicroelectronics lost 2.2%, while Infineon dropped 3.4%. ASM International fell 5.6%, while ASML fell 5.3%, pressured by a UBS rating cut.

Commerzbank fell 1.8% as the German state announced plans to reduce its stake in the bank.

Saipem, an Italian energy engineering group, announced on Tuesday evening that it had won two offshore contracts in Saudi Arabia and is up 2.4%.

RATE

Risk aversion benefits sovereign securities, considered safe assets in the event of a recession.

The yield on the German ten-year rate lost 3.8 bp to 2.236%, that of the two-year rate fell 4.6 bp to 2.335%.

The 10-year Treasury yield declined 2.4 bps to 3.8196%, while the two-year yield dropped 4.7 bps to 3.8405%.

CHANGES

The euro strengthened slightly against the dollar, with eurozone producer prices coming in slightly stronger than expected suggesting rates may need to remain tight for longer in the bloc.

The dollar fell 0.16% against a basket of benchmark currencies, the euro rose 0.11% to $1.1055 and the pound strengthened 0.06% to $1.3119.

OIL

The barrel rebounded after its sharp decline on Tuesday, with markets preparing for the publication of new indicators essential for understanding the American economic trajectory.

Brent rose 0.68% to $74.25 per barrel and US light crude (West Texas Intermediate, WTI) rose 0.77% to $70.88.

(Written by Corentin Chappron, edited by Blandine Hénault)

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