Europe stock market expected to rise cautiously before PMIs

by CORENTIN CHAPRON

PARIS (Reuters) – European stock markets are expected to rise at the opening on Tuesday before a burst of business activity and results indicators.

Futures contracts suggest an opening up 0.38% for the Parisian CAC 40, compared to 0.48% for the FTSE in London, 0.6% for the Dax in Frankfurt, and 0.47% for the EuroStoxx 50.

Markets will be focused on preliminary PMI indicators for April, while data released in March suggested that activity had started to rebound in the bloc.

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A resumption of activity would be welcomed by the markets, the euro zone having posted low or no growth over the last six quarters. The European Central Bank is preparing to cut rates and the combination of recovering activity and monetary easing could benefit risky assets.

Investors will also be attentive to the numerous results published on both sides of the Atlantic.

Renault’s first quarter figures will liven up discussions in Paris, as well as those of Novartis elsewhere in Europe, while those of Kering and ASM International will be published after the close.

In the United States, Tesla will publish its results while the car manufacturer’s stock has fallen 46% since the start of the year.

The bar will be high for American companies.

“Stock analysts continue to raise their earnings forecasts for the S&P 500: there are simply no signs of slowing corporate profits. The economy continues to grow thanks to favorable financial conditions,” explains Torsten Slok, chief economist at Apollo Global, also stressing that this “constitutes an inflation risk for the months to come”.

VALUES TO FOLLOW:

A WALL STREET

The New York Stock Exchange ended higher on Monday as investors expect a busy week with the release of quarterly results from many leading companies that could provide insight into the health of the US economy.

The Dow Jones index gained 0.67%, or 253.58 points, to 38,239.98 points. The broader Standard & Poor’s 500 gained 43.37 points, or 0.87% to 5,010.60 points. The Nasdaq Composite advanced 169.30 points (1.11%) to 15,451.305.

IN ASIA

The rebound on Wall Street supports the Tokyo Stock Exchange but caution prevails before the publication of numerous results from technology companies in the United States. The Nikkei index gained 0.30% to 37,552.16 points and the broader Topix gained 0.13% to 2,665.84 points.

Utility groups posted strong gains, with Osaka Gas gaining 5.23% after revising its forecast upwards and Tokyo Gas gaining 2.89%.

Chinese continental indices are falling under pressure from cyclical stocks but Hong Kong markets are rebounding, supported by technology stocks. The Hong Kong Hang Seng index advanced 1.69%, the Shanghai SSE Composite lost 0.73% and the CSI 300 0.8%.

RATES/EXCHANGES

The interest rate and foreign exchange markets are calm before a burst of indicators in Europe, which could make the markets react.

The ten-year Treasury yield is stable at 4.6066%, while the two-year rate remains at 4.974%.

The yield on the German ten-year rate is standing still at 2.487%, while that of the two-year rate is down 1.2 bp at 2.959%.

In Asia, the yen strengthened by 0.06% to 154.74 yen per dollar, while the Australian dollar gained 0.05% to 0.6452 dollars.

The dollar nibbles 0.11% against a basket of reference currencies, while the euro stands still at 1.0641 dollars and the pound sterling loses 0.13% to 1.2333 dollars.

OIL

Crude is up slightly as markets keep an eye on geopolitical developments in the Middle East.

Brent gained 0.29% to $87.25 per barrel, with American light crude (West Texas Intermediate, WTI) advancing 0.29% to $82.14.

(Written by Corentin Chappron, edited by Bertrand Boucey and Blandine Hénault)