THE BOOM SHOULD STILL BE EXTENSIVE IN EUROPE
PARIS (Reuters) – Major European stocks are expected to rise on Tuesday after Wall Street closed in positive territory, awaiting further indications about the health of the global economy and the evolution of U.S. monetary policy.
Index futures contracts suggest an increase of 0.29% for the Paris CAC 40, 0.18% for the Frankfurt Dax, 0.31% for the London FTSE 100 and 0.26% for the the Euro Stoxx 50.
Everything ended in green on Monday with a hesitant session and on Wall Street, the day ended higher while the main indices had opened lower.
Therefore, optimism prevails for the moment in view of the signs of deterioration in the economic situation and in the face of questions about the scope of the rate hikes that are coming in the United States.
After Monday’s unpleasant surprises in China (industrial production and retail sales below expectations and an unexpected rate cut), the indicators of the US “Empire State” activity index fell more than 42 points in a month, suggesting a contraction in the manufacturing sector in the New York area.
But the drop in bond yields was enough to restore momentum to US growth stocks, the engine of the rally that saw the Standard & Poor’s 500 index gain more than 17% in less than two months.
Equities are paradoxically benefiting from speculation about the Federal Reserve’s monetary policy, with economic indicators encouraging some investors to count on a less marked tightening than initially expected, or even a rate cut from next year.
For the foreseeable future, markets will watch the ZEW investor sentiment index in Germany at 09:00 GMT, then results from US retail giants Walmart and Home Depot.
ON WALL STREET
The Bourse of New York ended at hausse lundi, portée por la progression des valeurs de croissance, l’optimisme sur la capacité de la Réserve fédérale à assuring a landing en douceur de l’économie américaine ayant pris le pas sur les concerns raised by China.
The Dow Jones Industrial Average gained 0.45%, or 151.39 points, to 33,912.44, the Standard & Poor’s 500 gained 16.99 points (+0.39%) to 4,297.14 and the Nasdaq Composite rose 80.86 points (+0.62%) to 13,128.05.
Apple (+0.63%) and Microsoft (+0.53%) were among the main contributors to the advance of the S&P 500 and the Nasdaq. Tesla gained 3.1%.
Therefore, the S&P 500 “value” (+0.25%) underperformed growth stocks (+0.55%).
Major index futures suggest a slightly lower open for now.
On the Tokyo Stock Exchange, the Nikkei index closed virtually unchanged (-0.01%) after spending much of the session in the red, as the energy and transportation sectors suffered on growth concerns in both China as in the United States.
SoftBank also lost 2.56% after a Financial Times article said activist fund Elliott Management sold almost all of its holdings.
In China, the Shanghai SSE Composite gained 0.11%, while the CSI 300 fell 0.1%.
The dollar fell slightly against the main currencies (-0.06%), but remains close to its recent highs, supported by its status as a safe haven in the context of doubts about the risks of a recession.
The euro is trading at $1.016 after hitting a 10-day low at $1.0146.
In the government bond market, US Treasury yields extended their losses on Monday, to 2.7878% for ten-year bonds and 3.1823% for two-year bonds .
In Europe, the German 10-year bond rose slightly in early trading to 0.918%.
The oil market deepens its losses, still weighed down by the latest Chinese economic indicators, which have revived fears of a lasting deterioration in world demand for crude oil.
Brent fell 1.07% to $94.08 a barrel and US light crude (West Texas Intermediate, WTI) fell 0.79% to $88.70. They have already lost 3.1% and 2.9% respectively on Monday, with WTI returning in session to its lowest level since early February.
(Written by Marc Angrand)
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