The German DAX index at the Frankfurt Stock Exchange
PARIS (Reuters) – The main European stock markets are expected to fall on Wednesday at the opening, the markets worrying about the resistance of the American economy and the health of the banking sector in the United States, and their consequences on the rates, while fears about the Chinese economic situation continue to weigh on investor sentiment.
According to the first indications available, the Parisian CAC 40 would fall by 0.29% at the opening. Futures contracts suggest a drop of 0.19% for the FTSE in London, 0.37% for the Dax in Frankfurt and 0.33% for the EuroStoxx 50.
Rising 0.7% in July, US retail sales beat the Reuters consensus of 0.4%, an indication that the US economy is resisting rate hikes for the time being. However, the data did not support the scenario of a soft landing but rather revived fears that the Federal Reserve might raise rates again in September.
Credit rating agency Fitch also warned that the credit ratings of major banks, including JPMorgan Chase, could be downgraded if the environment continues to deteriorate for the sector, which weighed on sentiment.
Finally, the markets remain worried about the slowdown in the Chinese economy, the reduction in interest rates on certain monetary tools decided on Tuesday by the country’s central bank not having been deemed sufficient. Adding to the caution of early trading, the minutes of the Fed’s latest meeting, due Wednesday, could help investors shed some light on the future path of rates.
VALUES TO FOLLOW:
AT WALL STREET
The New York Stock Exchange ended lower on Tuesday as investors worried about the risks posed by retail sales data to the path of rates.
The Dow Jones index fell 1.02% to 34,946.39 points, the broader S&P 500 lost 1.16% to 4,437.86 points and the Nasdaq Composite fell 1.14% to 13,631.05 points.
IN ASIA
Japanese markets fell on worries about a slowing Chinese economy, while banking stocks fell after Fitch’s warning on the strength of US banks. The Nikkei lost 1.03% to 31,907.72 points, the Topix fell 1.07% to 2,265.8 points.
The bank index drops 2.18% after warnings from the rating agency. Mitsubishi UFJ Financial, Sumitomo Mitsui Financial and Mizuho Financial lost between 1.48% and 2.72%.
Chinese indices continue to decline after poor data on Tuesday. The SSE Composite of Shanghai fell by 0.25%, the CSI 300 by 0.18% and the Hong Kong Hang Seng index by 1.39%.
CHANGES
The dollar is losing ground, traders positioning themselves ahead of the publication of the Fed minutes.
The greenback fell 0.09% against a basket of benchmark currencies, the euro advancing 0.08% to 1.0913 dollars, while the pound sterling remained at 1.2703 dollars.
In Asia, the yen gained 0.09% to 145.44 yen to the dollar but remained near nine-month lows, while the Australian dollar was stable at $0.6451.
The yuan-dollar rate differential is at its highest since 2007, putting pressure on the yuan at 7.2941 yuan to the dollar, the highest since November 2022.
RATE
US yields are giving up some of their gains from yesterday’s session, which had taken the 10-year yield to a nine-month high, pending Fed minutes.
The ten-year Treasury yield eroded 2.4 basis points to 4.1973%, while the two-year rate fell 2.9 bp to 4.9248%.
OIL
Crude continues to suffer from the Chinese slowdown, which data released on Monday highlighted, despite good resilience from the US economy and support measures from the Chinese central bank.
Brent fell 0.27% to $84.66 a barrel, with US light crude (West Texas Intermediate, WTI) falling 0.22% to $80.81.
(Written by Corentin Chapron)