RISE ON SIGHT IN EUROPE, WALL STREET OPTIMISM WINS
PARIS (Reuters) – Major European stocks are expected to rise on Monday after strong growth on Wall Street on Friday, as investor optimism about the U.S. economic condition has so far outweighed unpleasant surprises from China.
Index futures contracts point to a 0.3% rise for the Frankfurt Dax, 0.45% for the London FTSE 100 and 0.37% for the EuroStoxx 50. As for the Paris CAC 40 , could be around 0.4% according to the first indications available.
On Wall Street, the rally accelerated at the end of Friday’s session and leading indices closed near their daily highs, confirming renewed confidence in previous days’ US inflation data.
Hopes of having passed the peak of US price rises, which could dissuade the Federal Reserve from raising interest rates by three-quarters of a point again next month, therefore remains the key driver of overall sentiment. .
However, the environment is less favorable in China, where the central bank surprised by announcing a cut of ten basis points in two of its main interest rates after the lower than expected figures for industrial production (+3.8 % annual in July), retail sales (+2.7%) and new bank loans (679,000 million yuan last month vs. 1,100 million expected).
“The decision shows that authorities were shocked by July’s credit figures, as well as the general slowdown in economic activity,” said Kaiwen Wang, China strategist at Clocktower Group.
In Europe, the upcoming trading session should be quiet, particularly in Paris as the day is a public holiday in France. In the US, the only major indicator for the day will be the “Empire State” activity index, expected at 12:30 GMT, but the main event of the week will be the release of monthly retail sales figures on Wednesday.
ON WALL STREET
The New York Stock Exchange closed sharply higher on Friday, posting a fourth straight week in the green as investors continue to bet on an ebb in inflationary tensions and a slowdown in interest rate hikes.
The Dow Jones Industrial Average gained 1.27%, or 424.38 points, to 33,761.05, the Standard & Poor’s 500 gained 72.88 points, or 1.73%, to 4,280.15 and the Nasdaq Composite advanced 267.27 points (+2.09%) to 13,047.18.
The S&P-500 and the Nasdaq thus registered a fourth consecutive positive weekly performance with respective gains of 3.26% and 3.08%.
In a context of falling inflation, Wall Street benefited notably from the first results of the monthly survey of household sentiment from the University of Michigan: its confidence index, at 55.1, confirms the upturn that began last month after its record low in June.
Major index futures so far suggest a lower open of around 0.2%.
On the Tokyo Stock Exchange, the Nikkei index gains 1.15% less than an hour before closing, prioritizing the impulse given by Wall Street on news from China such as the downward revision of Japanese growth in the second quarter, to a 2.2% annualized rate
The results of the companies provide additional support to the trend: the distributor Pan Pacific, owner of the Don Quijote brand, jumped 11.81% after raising its annual profit forecast.
In China, the Shanghai SSE Composite and CSI 300 are broadly unchanged after the day’s indicators and the surprise cut in key rates.
In the currency market, the easing of monetary policy by the People’s Bank of China (PBOC) caused the yuan to fall to its lowest level in a week against the dollar.
Confirmation of the slowdown in the Chinese economy also weighs on the Australian and New Zealand dollars.
Against a basket of benchmark currencies, the US dollar appreciated 0.1% and the euro returned to around 1.0250 (-0.10%).
US Treasury yields fell in Asia, to 2.8403% for ten-year notes and 3.2466% for two-year notes.
Thus, they continue the decline that began on Friday after the announcement of a drop in import prices in the United States last month.
The oil market is falling, penalized both by the day’s indicators in China, the world’s largest importer of crude oil, and by statements by Saudi Aramco, the world’s largest exporter, about a possible increase in its production.
Brent fell 1% to $97.17 a barrel and US light crude (West Texas Intermediate, WTI) fell 1% to $91.17.
(Written by Marc Angrand, with Jason Xue and Brenda Goh in Shanghai)
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