PARIS (Reuters) – Wall Street was expected to show little change on Tuesday and European stock markets moved on an uncertain mid-session note in cheap buying of raw materials the day after indexes fell on concerns about the health situation in China.
New York index futures point to a Wall Street open of 0.14% for the Dow, 0.21% for the S&P 500 and 0.08% for the Nasdaq. The CAC 40 in Paris was down 0.16% at 6,623.71 at around 12:05 GMT. The Frankfurt index, the DAX gained 0.01%, and the FTSE index gained 0.57% in London.
The pan-European FTSEurofirst 300 advanced 0.24%, the EuroStoxx 50 eurozone index fell 0.02%, and the Stoxx 600 rose 0.31%.
A timid rebound in risk appetite in Europe is led by energy (+4.15%) and core resources (+2.36%), which suffered particularly the day before from the risk of weaker demand in China as the country grapples with a surge in COVID-19 cases.
While the situation in China has not improved, as Beijing closed parks, malls and museums on Tuesday, while other cities resumed mass testing for the coronavirus, investors are now looking more towards interest rates, hoping for calm on that front.
Cleveland Fed Chair Loretta Mester spoke Monday night in favor of a December rate cut, and other Fed officials are scheduled to speak on Tuesday, while the central bank is set to release minutes of its latest monetary policy meeting on Wednesday.
While investors are hoping for clues in the Fed’s “minutes” about the future path of interest rates, markets are currently pricing in a 50 basis point rate hike from the Fed next month.
In the Eurozone where the European Central Bank is due to publish its “minutes” on Thursday, the debate is about a 50 or 75 basis point increase in rates. A Reuters poll of economists expects the interest rate to be raised by half a point. Robert Holzmann, a member of the ECB’s governing board, said on Tuesday that he had not yet decided on the matter, but was in favor of a three-quarters-point increase if inflation did not trickle down. Back to the area.
With regard to the development of the economy, the Organization for Economic Cooperation and Development ruled out, on Tuesday, the scenario of recession in the global economy next year, while estimating that the current energy crisis will lead to a sharp slowdown, especially in Europe.
The European Union, still divided over solutions to the gas crisis, is due to discuss on Thursday a proposal by the European Commission for a one-year cap on prices for such energy, according to the draft regulation seen by Reuters.
values in Europe
Energy and basic resources stocks posted some of the strongest gains as Saudi Arabia denied plans to increase production as previously reported by the Wall Street Journal.
In Paris, TotalEnergies, Vallourec, ArcelorMittal and even Maurel & Prom all gained 1.65% to 6.92%.
In London, BP, Anglo American, Glencore and Rio Tinto advanced from 1.32% to 5.89%.
In Rome, Enel gained 1.36%, after the energy company announced a €21 billion asset disposal plan aimed at reducing its debt.
In Frankfurt, Thyssenkrupp fell 4.7% after reducing to less than a 1% stake in the German group’s activist fund Cevian.
Bond yields in Europe rose slightly after recent comments of mixed gains from two members of the European Central Bank. Robert Holzmann said he would have preferred a rate hike of 75 basis points and Mario Centeno called for a smaller hike.
The yield on the 10-year German bund rose 2.3 basis points, to 2.004%.
In the United States, the yield on 10-year Treasury notes fell 3.6 points to 3.791%.
Stock exchanges In the foreign exchange market, the dollar fell by 0.33% against a basket of global currencies, affected by the return of risk appetite.
The Euro seized the opportunity to rise to $1.0265 (+0.23%), while the British Pound traded at $1.1872 (+0.43%).
Oil prices benefited from Saudi Arabia’s denial of a possible production increase, but a cut in crude demand forecasts by many analysts in light of the COVID-19 epidemic in China capped the gains.
Brent crude rose 1.48% to $88.74 a barrel, and US light crude (West Texas Intermediate WTI) rose 1.5% to $81.24 a barrel.
(Written by Claude Shingo, reported by Kate Enteringer)
by Claude Shingo