Cautious rise in sight in Europe, oil still in sight

by Claude Chendjou

PARIS (Reuters) – Major European stock markets are expected to rise cautiously on Tuesday at the open after a mixed session the previous day linked to doubts over oil demand and the trajectory of central bank interest rates due to the decision surprise of several OPEC countries to make cuts in their production.

Futures contracts on indices suggest an increase of 0.34% for the CAC 40 in Paris, 0.35% for the Dax in Frankfurt, 0.33% for the FTSE 100 in London and 0.28% for the EuroStoxx 50.

The session should once again be driven by the oil compartment after the decision of the OPEC+ countries to cut their production by around 1.16 million barrels per day (bpd), which could revive oil prices. but feed inflation that central banks are working to curb.

While expectations for a Federal Reserve (Fed) rate hike had ebbed last week after the release of data showing a slowdown in the PCE price index in the United States, doubts are now emerging on the continuation of the turn of the monetary screw.

However, investors remain generally confident about interest rates given the decline in short-term bond yields.

“Markets are assuming the Fed will lower interest rates later this year, but I don’t think that’s the likely scenario,” said Steven Ricchiuto, an economist at Mizuho Securities USA.

“The recession will be long but shallow, and I think that will keep inflation from coming down really fast,” he said.

In the Eurozone, monthly producer price figures, due at 09:00 GMT, will give clues to evolving inflationary pressures as the market currently expects European Central Bank (ECB) rates to peak around 3 .6% in November.

VALUES TO FOLLOW IN EUROPE:

The banking compartment, which continued its recovery on Monday, will be followed with in particular Credit Suisse which is holding its general meeting on Tuesday.

AT WALL STREET

The New York Stock Exchange ended Monday in disorder the day after the announcements of the OPEC + countries, which benefited the Dow Jones but slowed down the S&P-500 and pushed back the Nasdaq, further penalized by the sharp decline of Tesla .

The Dow Jones Industrial Average gained 0.98%, or 327 points, to 33,601.15 points.

The broader S&P-500 rose 0.37% to 4,124.49 after spending much of the day in the red.

The Nasdaq Composite, on the other hand, lost 32.45 points (-0.27%) to 12,189.45 points.

In values, Chevron gained 4.16% and ExxonMobil 5.9%, while the S&P energy sector index experienced its strongest increase since October (+4.9%).

Tesla, for its part, fell 6.1% due to lower-than-expected deliveries in the first quarter.

IN ASIA

On the Tokyo Stock Exchange, the Nikkei index advanced 0.32% to 28,277.95 points and the Topix, larger, took 0.13% to 2,020.25 points as the close approached.

In China, the Shanghai SSE Composite gained 0.24% but the CSI 300 lost 0.07%.

The MSCI index comprising stocks from Asia and the Pacific (excluding Japan) is, for its part, stable.

CHANGES

The dollar recovered a little (+0.1%) against a basket of reference currencies the day after the publication of the monthly statistics on manufacturing activity in the United States, which highlighted new signs of a slowdown in economy, with the ISM index for March falling to 46.3, its lowest level in almost three years.

The euro is stable at 1.089 dollars (-0.05%).

RATE

The yield on two-year US Treasury bills was almost unchanged on Tuesday at 3.9738% after falling nearly ten basis points the day before in reaction to the figures from the US ISM manufacturing index.

OIL

Oil prices, which jumped more than 6% on Monday after announcements by OPEC and its allies, are still rising: Brent takes 0.47% to 85.33 dollars a barrel and American light crude (West Texas Intermediate, WTI) 0.5% to $80.82.

(Written by Claude Chendjou, edited by Matthieu Protard)