by Diana Mandia
(Reuters) – Wall Street is expected to fall on Tuesday and European stock markets are falling mid-session, in response to trade tensions between the United States and China, while investors continue to keep an eye on France, where Prime Minister Sébastien Lecornu must make his general policy declaration in the afternoon under the threat of at least two motions of censure. New York index futures signal Wall Street opening down 0.84% for the Dow Jones, 1.1% for the Standard & Poor’s-500 and 1.43% for the Nasdaq.
In Paris, the CAC 40 lost 1.17% to 7,841.44 points around 11:05 GMT. In Frankfurt, the Dax fell by 1.46% and in London, the FTSE 100 lost 0.49%.
The EuroStoxx 50 index is down 1.22%, the FTSEurofirst 300 is down 0.90% and the Stoxx 600 is down 0.92%.
Trade tensions are back between the world’s top two economic powers, who on Tuesday began reciprocally imposing additional port fees on shipping companies that deliver a range of products, from toys to crude oil.
World stock markets had already reacted strongly on Friday to US President Donald Trump’s threat to impose additional 100% customs duties on imports from China, after the latter announced restrictions on exports of rare earths.
If the tenant of the White House adopted a more conciliatory tone over the weekend with regard to the Asian giant, the markets seem to be wary of his reversals in terms of commercial policy, in a context also marked by a series of warnings on results in the automobile sector, traditionally exporting, and while the results season begins this same week.
The automobile sector fell by 2.15%, weighed down by Michelin, which lost 9.24% at the bottom of the CAC 40 after having revised downwards its forecasts for the whole year on Monday evening, citing less favorable commercial conditions than expected on the North American market. In its wake, the German auto parts manufacturer Continental lost 4.3%, while the Italian Pirelli lost 2.7%.
“The automotive sector provides us with a lot of information that goes beyond the situation of this company (Michelin). It tells us about the impact of tariffs on the sector, about consumer demand for large purchases and also gives us indications about demand in other regions. This will be a key sector to watch,” said Fiona Cincotta, analyst at City Index.
On today’s results agenda, there are in particular the quarterly figures from American banks JPMorgan Chase, Goldman Sachs and Citigroup, which will be scrutinized at the opening of the New York Stock Exchange, while LVMH is expected after the close in Europe.
French politics are no less a source of concern, as Prime Minister Sébastien Lecornu delivers his general policy speech on Tuesday at 1:00 p.m. GMT under threat of censorship from the Socialist Party and strives to provide the second largest economy in the euro zone with a budget by the end of 2025.
Fed President Jerome Powell is also due to speak this Tuesday at 4:20 p.m. GMT on the economic outlook at the annual meeting of the NABE (National Association for Business Economics). VALUES TO FOLLOW AT WALL STREET
VALUES IN EUROPE
Soitec came out bottom of the SBF 120 on Tuesday (-12%), the French group being penalized, like its counterparts in the European semiconductor sector, by a context marked by trade tensions between the United States and China. Elsewhere in Europe, Swedish telecommunications equipment manufacturer Ericsson rose 15.4% after publishing quarterly results above estimates, while hinting at a potential increase in distribution to shareholders.
Dutch digital mapping specialist TomTom climbs 7.2%, supported by the increase in its operating profit in the third quarter.
RATE
US bond yields fell on Tuesday after returning from a long weekend due to “Columbus Day”, while in the euro zone investors increased their bets on a further rate cut from the European Central Bank (ECB) due to Donald Trump’s latest threats against China. The yield on ten-year Treasuries fell by 4.8 basis points to 4.0033%. The two-year yielded 5 basis points to 3.4723%.
The ten-year German Bund yield fell 4.3 basis points to 2.5874%. That of the two-year bond drops 3.2 basis points to 1.9092%.
In France, the ten-year OAT yield lost 3.9 basis points to 3.4264%.
British bond yields also fell on Tuesday after the publication of data indicating a slowdown in wage growth, a fact closely followed by the Bank of England (BoE) which assesses the opportune moment to make a further cut in interest rates.
The British 10-year Gilt lost 7.8 basis points to 4.583%.
CHANGES
The dollar gained 0.15% against a basket of reference currencies around 10:50 GMT, while remaining volatile against a backdrop of new trade fears.
The euro lost 0.13% to 1.1553 dollars.
The pound sterling lost 0.50% against the dollar as the ONS reported on Tuesday a slowdown in the growth of average weekly earnings in the United Kingdom, excluding bonuses.
OIL
Oil prices are falling amid uncertainty linked to trade tensions and as the International Energy Agency (IEA) has signaled that supply is expected to increase in 2025 and 2026.
Brent fell 2.76% to $61.57 per barrel and American light crude (West Texas Intermediate, WTI) fell 2.92% to $57.75.
METALS
The price of gold reached a record high of $4,179.48 per ounce on Tuesday, amid strengthening prospects of a Fed rate cut and a resurgence in trade tensions between the United States and China.
Spot gold was trading at $4,132.75 per ounce at 10:58 GMT.
NO MORE MAJOR ECONOMIC INDICATOR ON THE AGENDA FOR OCTOBER 14
(Some data may have a slight lag)
(Writing by Diana Mandiá, editing by Kate Entringer)
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