by Laetitia Volga
PARIS (Reuters) – Major European stocks are expected to head lower at the open on Tuesday amid lingering concerns over the risk of recession.
The first available indications give a decline of 0.58% for the Parisian CAC 40, 0.45% for the Dax in Frankfurt, 0.03% for the FTSE in London and 0.62% for the EuroStoxx 50 .
European markets opened Monday for the first session of 2023 ended higher, boosted by the improvement in manufacturing activity in the euro zone, according to the first results of the S&P Global surveys of purchasing managers.
But market participants continue to fear that monetary policy measures taken by central banks will tip the global economy into recession.
Against this backdrop, investors are eagerly awaiting the minutes of the Federal Reserve’s December meeting, which will be released on Wednesday and could provide some guidance on the direction of rates in 2023.
In the economic news of the day, the results of the Chinese surveys of purchasing managers in the manufacturing sector show a further deterioration in activity with the impact of the COVID-19 epidemic on production chains, the index Caixin-Markit PMI down to 49 and the official PMI to 47.
The first estimate of inflation in Germany at 13:00 GMT will animate the session in Europe and could reassure investors on the deceleration of prices, the Reuters consensus giving an increase of 10.7% over one year after 11.3% in November.
AT WALL STREET
The New York Stock Exchange ended down on Friday the last session of a year marked by heavy losses linked to monetary tightening in the face of inflation, fears of a recession, the Ukrainian conflict and the health situation in China.
The Dow Jones index fell 0.22%, or 73.55 points, to 33,147.25 points, the S&P-500 lost 9.78 points, or 0.25%, to 3,839.50 points and the Nasdaq lost fell 11.61 points (-0.11%) to 10,466.48 points.
All three recorded their first annual decline since 2018 and their largest since 2008 as the Fed carried out the fastest rate hike since the 1980s.
Futures so far suggest an open up 0.2% to 0.3%.
IN ASIA
In China, despite lackluster economic statistics, equity indices are up as investors remain optimistic about the reopening of the country. The CSI 300 gained 0.25% and the Shanghai SSE Composite 0.76%.
The Tokyo Stock Exchange is closed until Wednesday.
EXCHANGES/RATES
The dollar is stable against a basket of benchmark currencies pending the publication of the Fed’s “minutes” on Wednesday.
The euro was unchanged at 1.0663 dollars but the yen gained 0.83% against the greenback, its highest since June, due to speculation on the Bank of Japan abandoning its ultra-accommodative policy.
As for government bonds, the yield on ten-year US Treasury bonds is up slightly to 3.8464%.
OIL
Oil prices are timidly moving forward despite poor Chinese economic figures and warnings from the International Monetary Fund about the difficulties to come in 2023 with the slowdown in activity in the United States, Europe and China.
Brent gained 0.09% to 85.99 dollars a barrel and American light crude (West Texas Intermediate, WTI) advanced 0.17% to 80.4 dollars.
(Laetitia Volga, edited by)