by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to rise after a three-day holiday shutdown and European stocks are also trading green mid-session as stocks attempt a rebound as the energy crisis amplifies by Friday’s announcement of the prolonged closure of the Nord Stream 1 gas pipeline, is far from over.
Futures on New York indices signal an opening of Wall Street up 0.65% for the Dow Jones, 0.68% for the Standard & Poor’s 500 and 0.68% for the Nasdaq.
In Paris, the CAC 40 took 0.42% to 6,119 points around 11:05 GMT. In Frankfurt, the Dax advances by 0.92% and in London, the FTSE gains 0.19%.
The pan-European FTSEurofirst 300 index gained 0.5%, the eurozone EuroStoxx 50 0.51% and the Stoxx 600 0.55%.
The rebound in equity markets remains fragile, however: “It is perhaps natural that we are taking a little break at the moment, but it is difficult to imagine where the good news will come from”, explains James Athey, director of investments at Abrn. According to him, Russian gas will remain “the sword of Damocles” above the European economy.
Russia has decided to postpone indefinitely the restart of the Nord Stream 1 gas pipeline which supplies Europe, raising fears of a new spike in energy prices in an already strongly recessionary context.
Services PMI surveys, released on Monday, showed a worsening crisis linked to the rise in the cost of living and a deterioration in the outlook.
In Germany, industrial orders fell more than expected in July, the sixth in a row, with a decline of 1.1%.
The ISM services index in the United States for the month of August is due at 14:00 GMT.
Alongside the economic statistics, the decisions already announced by central banks such as that of the RBA in Australia which raised its main key rate on Tuesday by half a point to 2.35%, or those expected from the Bank of Canada on Wednesday and especially that of the European Central Bank (ECB) on Thursday, do not encourage risk taking.
“The ECB should launch a monetary bazooka in the form of a 75 basis point rate hike. Indeed, with inflation at an all-time high in August…the central bank must use all tools to calm rising prices,” predicts Lukman Otunuga, an analyst at FXTM.
WALL STREET VALUES TO FOLLOW
VALUES IN EUROPE
In Europe, the energy (-2.01%) and utilities (-0.52%) sectors were the only ones in the red at mid-session, as oil was caught up in demand fears .
On the other side of the spectrum, the distribution compartment (+2.3%), at the top of the Stoxx 600, is driven in particular by British stocks in the sector, a 40 billion pound business aid plan ( 46.5 billion euros) being expected from the new Prime Minister Liz Truss.
In individual values, Credit Suisse advances by 1.58% thanks to the announcement of the sale of its trust activities, while Siemens Energy takes 2.86% after the announcement of its integration into the German Dax.
Lufthansa grants itself 1.38%, the company being about to present a salary proposal to its pilots to avoid an aggravation of the social conflict.
On the downside, Porsche Holding, a subsidiary of Volkswagen (+3.4%), fell by 0.09%, after the announcement of the launch of its IPO project.
RATE
Bond yields in Europe are benefiting from an impending ECB rate hike, with money markets pricing the likelihood of a three-quarter point hike on Thursday at nearly 90%. Other analysts estimate that this increase will be followed by two others of half a point each by the end of the year.
The yield on the ten-year German Bund, a benchmark in the euro zone, took around seven basis points to 1.49%.
In the United States, that of Treasuries of the same maturity advanced by nearly five points to 3.238%, nearly two weeks before the meeting of the American Federal Reserve (Fed).
EXCHANGES The US dollar was stable (+0.04%) against a basket of reference currencies. It recently hit a 24-year high against the yen at 141.56 and a 20-year high against the euro at 0.98.
The single European currency is trading Tuesday at 0.9928 dollars.
The pound sterling, which gained in session up to 0.6% to 1.19609 dollar, remains well oriented with the approach of the transfer of power between Boris Johnson and Liz Truss at the head of the British government.
The Australian dollar fell 0.24% after the unsurprising 50 basis point hike in RBA rates.
OIL
Oil prices are falling after two sessions of gains, as concerns about global demand amid heightened risk of recession took precedence over Monday’s announcement of an OPEC+ production cut of 100,000 barrels per day in october.
Brent fell 3.1% to 92.77 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.54% to 86.4 dollars.
(Written by Claude Chendjou, edited by Sophie Louet)