by Claude Chendjou
PARIS (Reuters) – The main European stock markets are expected to decline slightly on Tuesday for the last session of the year, with no catalyst on the agenda to compensate for the low trading volumes expected while some markets are closed and the session shortened on others for New Year’s Eve.
According to the first available indications, the Parisian CAC 40 should lose 0.09% at the opening. The FTSE 100 in London is expected to drop 0.25%. The EuroStoxx 50 index is expected to fall by 0.67% and the Stoxx 600 down by 0.55%.
Markets are closed in Italy, Switzerland and Belgium.
Investors should continue to steer clear of risky assets this New Year’s Eve ahead of the 1:00 p.m. GMT close of most open stock markets in Europe. The financial markets of Euronext, London and Wall Street will also be closed on Wednesday for the New Year.
The economic agenda of the main markets in the world is also practically empty this Tuesday and only manufacturing activity indicators are expected Thursday and Friday in Europe and the United States.
In China, manufacturing activity grew for a third consecutive month in December, although at a slower pace, shows an official survey published Tuesday.
A WALL STREET
The New York Stock Exchange ended down on Monday at the end of a sluggish session, while the rise in American bond yields continues to weigh on the stock markets.
The Dow Jones index fell 0.97%, or 418.48 points, to 42,573.73 points.
The broader Standard & Poor’s 500 lost 63.90 points, or 1.07%, to 5,906.94 points.
The Nasdaq Composite fell 235.25 points, or 1.19%, to 19,486.785 points.
The rise in Treasury yields, largely caused by speculation about the monetary policy that Donald Trump will adopt after he takes office on January 20, is putting strong pressure on US stock markets after their considerable gains of the last two years.
IN ASIA
The Tokyo Stock Exchange, which ended Monday in the red on profit-taking, is closed this Tuesday while the Nikkei index gained almost 20% over the whole of 2024. Markets in Japan will reopen on January 6, 2025.
The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) lost 0.2%, but is heading towards a gain of 8% in 2024, the second consecutive year in the green.
In China, the Shanghai SSE Composite fell by 1.63% and the CSI 300 by 1.60%, despite encouraging manufacturing activity figures which suggest that the stimulus measures deployed by Beijing are starting to bear fruit.
Stock markets in China, however, recorded their first annual gain in three years after a series of losses since 2021 triggered by the COVID-19 pandemic.
“On the stock markets, China’s performance was a positive surprise for many investors,” Value Partners analysts point out in a note.
“The various support measures announced during the second half of the year, which targeted monetary policy, the real estate market and financial markets, largely exceeded expectations and eclipsed current economic concerns,” they add.
CHANGES
The dollar fell 0.11% against a basket of benchmark currencies for the last session of the year but is on track to record solid gains throughout 2024. Investors are preparing for a slowdown in the pace of the reduction in key rates in the United States and are monitoring the consequences of the policy of the new administration of Donald Trump.
The dollar index is around 108 points, not far from the two-year high reached this month. The greenback has at this stage gained more than 6% in 2024.
The euro fell by 0.03%, to 1.0406 dollars. Europe’s single currency is expected to lose more than 5% this year against the greenback, with traders expecting the European Central Bank (ECB) to cut rates at a faster pace than the US Federal Reserve (Fed). .
The British pound is trading at $1.2550 (-0.01%), heading for a loss of around 1% in 2024.
RATE
The yield on ten-year US Treasury bonds dropped three basis points, to 4.5147%, after gaining nearly 69 basis points since the start of the year.
The yield on the German Bund of the same maturity is virtually stable, after rising on Monday near its highest level since mid-November, in the wake of rising U.S. Treasury yields.
The yield gap between the Bund and the French ten-year OAT stands at around 82 basis points.
OIL
The oil market is on the rise after the publication of data on manufacturing activity in China in December, but crude prices are expected to end 2024 for a second consecutive year in the red due to concerns about demand in major consuming countries.
Brent rose 0.86% to $74.63 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.90% to $71.63.
(Written by Claude Chendjou, edited by Augustin Turpin)
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