by Claude Chendjou
PARIS (Reuters) – The main European stock markets are expected on a cautious note on Monday, at the start of a week marked by the publication of several macroeconomic indicators, including the PMI indices in Europe, the decisions of three major central banks and new results of companies.
According to the first indications available, the Parisian CAC 40 should lose 0.19% at the opening. The Dax in Frankfurt is seen down 0.26% and the FTSE 100 in London down 0.18%. On the Madrid Stock Exchange, the Ibex 35 index could open down 0.59% the day after legislative elections without a clear majority in Parliament. The EuroStoxx 50 index is expected to fall by 0.29%.
The US Federal Reserve (Fed) begins a two-day monetary policy meeting on Tuesday that is expected to end with a final 25 basis point hike in federal rates, to a range of 5.25%-5.50%, according to market forecasts.
The European Central Bank (ECB) will follow suit on Thursday with also an expected increase of a quarter of a point in its key rates, which would bring the deposit rate to 3.75%.
“For both (central banks), we expect these meetings to be the last upside of the cycle, although neither Lagarde nor Powell are unlikely to signal the peak has been reached, opting to keep a hawkish tone and say it will remain data driven,” said NatWest Markets analyst John Briggs.
The decisions of the Bank of Japan (BoJ) are expected on Friday and the consensus is for a status quo in the accommodative policy chosen by the bank and continued control of the yield curve, despite a reacceleration of inflation in June.
The Bank of England (BoE) will only meet on August 3 and is also expected to opt for a further rate hike, with a 25 basis point increase expected to take its main rate to 5.25%.
In the macroeconomic chapter, the day’s session should be animated by the publication of the composite PMI indices in Europe for the month of July, while Friday are expected the monthly inflation figures in several countries of the euro zone and Thursday the first estimate of the American gross domestic product (GDP) for the second quarter of the United States.
In terms of financial publications, the season continues with around thirty Parisian CAC 40 companies and some of the Gafam (Alphabet, Meta, Microsoft) in the United States publishing this week.
VALUES TO FOLLOW IN EUROPE:
AT WALL STREET
The New York Stock Exchange ended in disarray on Friday, as gains in the health care sector managed to offset losses in some large companies listed on Wall Street.
The Dow Jones Industrial Average gained 0.01 percent, or 2.51 points, to 35,227.69 points.
The broader S&P-500 gained 1.47 points, or 0.03%, to 4,536.34 points.
The Nasdaq Composite fell for its part by 30.5 points (-0.22%) to 14,032.81 points.
Some big companies in the technology sector, such as Nvidia, Microsoft or Meta Platforms, fell during the session.
Netflix also fell for the second session in a row after the publication of quarterly results deemed disappointing.
Analysts attributed Friday’s swings to monthly option expirations and Nasdaq rebalancing, expected at the close of trading.
IN ASIA
At the Tokyo Stock Exchange, the Nikkei index advances by 1.26% to 32,711.03 points and the Topix, larger, takes 0.7% to 2,277.97 points as the close approaches. The Japanese market is thus regaining color for the first time in three sessions thanks to the automotive sector, which is benefiting from the weakness of the yen ahead of expectations for the BoJ meeting. Mitsubishi Motors jumped 4.1%, while the index of transport equipment manufacturers gained 1.24%.
The MSCI index comprising stocks from Asia and the Pacific (excluding Japan) fell by 0.3%.
In China, the Shanghai SSE Composite lost 0.07% and the CSI 300 lost 0.4%.
EXCHANGES/RATES
The dollar is practically unchanged (-0.01%) against a basket of reference currencies, including the euro which is trading at 1.1117 dollars (-0.05%).
The Japanese currency lost further ground at 141.41 yen to the dollar after falling 1.3% on Friday following information from Reuters that the BoJ would maintain its policy of controlling the yield curve.
On the bond market, the yield on ten-year US Treasury bills is stable at 3.8508%.
OIL
The oil market takes a breather on Monday after gaining 1.5% for Brent last week and 2.2% for WTI, the fourth consecutive weekly increase.
Brent fell 0.3% to 80.83 dollars a barrel and US light crude (West Texas Intermediate, WTI) also lost 0.3% to 76.84 dollars.
(Written by Claude Chendjou, edited by Nicolas Delame)
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