by Claude Chendjou

PARIS (Reuters) – Wall Street is expected to rise on Thursday with the chip sector, while the European stock markets, driven by a series of generally positive corporate results, are in the green at mid-session. Futures on New York indices signal an opening on Wall Street up 0.18% for the Dow Jones, 0.35% for the Standard & Poor’s 500 and 0.50% for the Nasdaq.

In Paris, the CAC 40 gained 0.71% to 8,134.64 points around 11:10 GMT while French Prime Minister Sébastien Lecornu escaped two motions of censure filed by La France insoumise (LFI) and the National Rally (RN) on Thursday.

In Frankfurt, the Dax advances by 0.13%. In London, the FTSE fell by 0.09%, in a hesitant session where cyclical consumption weighed after the Whitbread results.

The pan-European FTSEurofirst 300 index and the Eurozone EuroStoxx 50 each rose by 0.40%. The Stoxx 600 advanced by 0.38%, driven primarily by non-cyclical consumption.

The positive trend on the markets has been fueled since the start of the week by better than expected profits from the main American and European companies, which relegates Sino-American trade tensions and the “shutdown” which continues in the United States to the background.

Stoxx 600 companies are expected to post a 0.5% rise in third-quarter profits, according to LSEG I/B/E/S data, compared with a 0.2% decline forecast a week ago.

“We have the large market capitalization companies LVMH and ASML which have exceeded market expectations and this creates a very good context for the rest of the results season,” summarizes Janet Mui, head of market analysis at RBC Brewin Dolphin.

In the United States, the market should once again be driven by the semiconductor segment in the wake of TSMC’s forecasts in a context of enthusiasm for artificial intelligence (AI), after the solid quarterly results of the major Wall Street banks.

VALUES TO FOLLOW AT WALL STREET

TSMC gains 2% in pre-market trading as the world’s largest producer of advanced electronic chips raised its full-year revenue forecast on Thursday, due to an optimistic outlook for artificial intelligence (AI) spending, after posting a record quarterly profit. Marvell Technology, Nvidia, Micron Technology, Amd and Broadcom gained 1.1% to 2.7% in pre-market trading.

VALUES IN EUROPE

In Paris, Pernod Ricard advanced by 2.51% despite the group’s publication of a falling quarterly turnover, impacted by China and the United States. The French spirits manufacturer had, however, already prepared the market for a difficult quarter. The food and beverage index in Europe takes 3.31%.

FDJ United fell 3.03% after reporting a decline in its quarterly turnover mainly due to the increase in gaming taxes.

Kering drops 1.71%, while the European luxury sector is stable while Berenberg analysts estimate in a note published Thursday that luxury is at a turning point and that the “supercycle” which lasted for three decades has ended due to a structural problem in demand.

Elsewhere in Europe, Nestlé climbs 8.79% after announcing its intention to cut 16,000 jobs. The group also exceeded expectations for third quarter turnover.

The German medical equipment manufacturer Sartorius jumped 8.99% and its French subsidiary Sartorius Stedim Biotech 9.54% after the publication of their quarterly results and forecasts.

Whitbread in the UK fell 9.49% as the hotel and restaurant operator reported a 7% drop in half-year profit due to a decline in food and drink sales.

RATE

Euro zone bond yields were virtually flat on Wednesday after four sessions that sent borrowing costs to a three-month low.

The yield on the French ten-year OAT takes 1.5 basis points, to 3.34%, while its German equivalent gains around one point, to 2.57%. The gap between its two obligations remains around 77 points after the rejection by French deputies of two motions of censure. The yield on ten-year US Treasury bonds lost 2.4 basis points, to 4.02%, after an increase of around two points on Wednesday, while trade tensions between the United States and China and the partial closure of the US federal administration (“shutdown”) were monitored by the markets.

This shutdown prevents the publication of official indicators in the United States while an inflation index was expected this Thursday, as well as retail sales. In the absence of these statistics, the market must be content with the Fed’s Beige Book, which showed Wednesday evening that economic activity had changed little and employment had remained generally stable in recent weeks in the United States.

CHANGES

The dollar fell 0.21% against a basket of international currencies and is heading towards a third consecutive session of decline, concerns about tensions between the United States and China and the accommodating comments of Fed officials continuing to weigh on sentiment.

The euro gains 0.09%, to 1.1655 dollars, before an intervention by Christine Lagarde, the president of the European Central Bank (ECB), at 4:00 p.m. GMT as part of a debate on the sidelines of the meetings of the IMF and the World Bank in Washington.

The pound sterling is trading at $1.3430, up 0.22%, after hitting a one-week high in session, the prospect of a more accommodating Fed outweighing concerns about the economy and the budget in Great Britain which will be presented next month.

OIL

The oil market was stable on Thursday after hitting its lowest level since the beginning of May the day before due to Sino-American trade tensions. Investors are now analyzing the impact of a possible halt to Russian oil imports by India, after US President Donald Trump said Indian Prime Minister Narendra Modi promised him that India would no longer buy Russian oil.

Brent rose 0.35% to $62.36 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.03% to $58.43.

METALS

Gold continues its rally Thursday for the fifth consecutive session, investors turning to this safe haven asset due to trade tensions, the shutdown and the prospects of a rate cut from the Fed.

Spot gold rose 0.76% to $4,241 an ounce at 11:05 GMT, after hitting a record $4,243.

MAIN ECONOMIC INDICATORS ON THE AGENDA FOR OCTOBER 16:

COUNTRY GMT INDICATOR PERIOD PREVIOUS CONSENSUS

USA 12:30 p.m. Weekly registrations for the week. to 6 ndnd*

unemployment October

USA 12:30 Philly Fed Index October 8.5 23.2

USA 12:30 September retail sales +0.4% +0.6%*

USA 12:30 Producer prices (PPI) September +0.3% -0.1%*

– over one year +2.7% +2.6%*

*subject to lifting of the “shutdown”

(Writing by Claude Chendjou, edited by Kate Entringer)

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