The Brongniart Palace, former Paris Stock Exchange
PARIS (Reuters) – The main European stock markets are expected to rise on Tuesday at the opening, the markets welcoming the Chinese rate cuts decided after a new series of disappointing data.
Futures contracts on the Parisian CAC 40 suggest an increase of 0.41% at the opening, against 0.25% for the FTSE in London, 0.34% for the Dax in Frankfurt, and 0.46% for the EuroStoxx 50.
Industrial production and retail sales in China were weaker than consensus, growing 2.5% and 3.7% respectively.
In addition, new constructions measured by floor area are down 25% over one year.
Investors, however, welcomed the drop in one-year loan rates to financial institutions, down 15 basis points, the largest drop since the start of the Covid pandemic.
Economists polled by Reuters on average forecast an increase of 0.2% compared to June and 0.7% on an annual basis.
Japanese growth in the second quarter also surprised the consensus: supported by tourism and automotive exports, annualized growth reached 6% in the second quarter, against a consensus of 3.1%.
Markets are expecting retail sales in the United States at 12:30 GMT on Tuesday, a figure that will help gauge the resistance of the US economy to rate hikes.
VALUES TO FOLLOW:
AT WALL STREET
The New York Stock Exchange ended higher on Monday, with technology and high-growth stocks notably supporting the indexes after an upbeat sector rating from Morgan Stanley.
The Dow Jones index gained 0.07% to 35,307.63 points, the broader S&P 500 gained 0.58% to 4,489.72 points, and the Nasdaq Composite advanced 1.05% at 13,788.33 points.
IN ASIA
The Japanese markets ended higher, more supported by the rise in technology stocks in the United States than by the good economic data. The Nikkei rose 0.56% to 32,238.89 points, the Topix gained 0.39% to 2,289.79 points. Chip test equipment maker Advantest rose 1.88%, against 1.68% for semiconductor machine maker Tokyo Electron.
Poor Chinese data weighs on local indices. The SSE Composite of Shanghai fell by 0.36%, the CSI 300 by 0.53% and the Hong Kong Hang Seng index by 0.88%.
CHANGES
The dollar retreated after its sharp rise on Monday, linked in particular to geopolitical concerns.
The dollar fell 0.14% against a basket of benchmark currencies, with the euro and the pound sterling rising 0.07% to 1.0914 dollars and 0.10% to 1.2705 dollars respectively.
In Asia, the yen held steady at 145.51 yen to the dollar, while the Australian dollar rose 0.37% to $0.6508.
The measures taken by China’s central bank are supporting the yuan, which hit a high since November 2022 at 7.2769 yuan per dollar.
RATE
Yields rise ahead of the release of the US Manufacturing Index and Retail Sales at 12:30 GMT.
The ten-year Treasury yield rose 3.7bp to 4.2188%, while the two-year rate gained 1.7bp to 4.982%.
The German ten-year yield increased by 3.3 bp to 2.67%, that of the two-year rate rising by 3.3 bp to 3.104%.
OIL
Oil advanced moderately, torn between modest optimism after China’s rate cut and concern after new data on industrial production and retail sales.
Brent nibbles 0.21% to 86.42 dollars a barrel, US light crude (West Texas Intermediate, WTI) is granted 0.17% to 82.65 dollars.
(Writing by Corentin Chapron, editing by Kate Entringer)