by CORENTIN CHAPPRON
PARIS (Reuters) – Wall Street is expected to fall on Tuesday, while European markets retreated at mid-session, the latest support from China to its economy being of a lesser magnitude than anticipated by the markets.
After an extended weekend on the New York Stock Exchange, index futures suggest an opening down 0.37% for the Dow Jones, 0.40% for the Standard & Poor’s 500 and 0.50% for the Nasdaq.
In Paris, the CAC 40 lost 0.32% to 7,291 points around 10:10 GMT. In Frankfurt, the Dax, more exposed to the Chinese economy, lost 0.60%, while the FTSE in London stagnated.
The pan-European FTSEurofirst 300 index fell 0.30%, compared to 0.10% for the euro zone’s EuroStoxx 50 and 0.37% for the Stoxx 600.
China lowered two benchmark interest rates on Tuesday, a decision expected by all analysts polled by Reuters who, however, expected a larger cut as the Chinese economy shows signs of slowing.
“Risk aversion continues on Tuesday after China’s 5-year LPR rate fell on a disappointing scale,” said Kenneth Broux, director of corporate research at Societe Generale.
“These new easing measures, combined with the injections of liquidity, follow the stimulus packages announced this weekend and considered vague and disappointing, according to some”.
“The rate cut is only 10 bps: this is better than nothing, but will not be terribly effective in supporting a slowing economy”, abound the strategists of ING.
THE VALUES TO FOLLOW IN WALL STREET
The proposed $ 20 billion (18.29 billion euros) takeover of the Figma platform by Adobe is being scrutinized by European competition regulators, according to information from the Financial Times.
VALUES IN EUROPE
Sanofi leads the Stoxx 600 and the CAC 40, up 3.23%, after announcing on Tuesday that it had won the arbitration initiated by Boehringer Ingelheim in the case of Zantac, a treatment for gastric acidity accused of being carcinogenic.
Valneva soars following encouraging experimental results for a chikungunya vaccine, and posts the biggest rise in the SBF 120, up 14.89%.
Neoen follows, up 4.53%, after revising its adjusted EBITDA forecasts upwards.
Conversely, Lanxess plunged 16.50%, the worst performance of the Stoxx 600, the group having revised its profit forecasts downwards for the second quarter and the whole of the year.
Renault is the red lantern of the CAC 40, down 3.65%: its former CEO Carlos Ghosn has sued the group’s partner, Nissan, from whom he is claiming a billion dollars, according to information from Reuters.
RATE
In Europe, the risk aversion movement is only moderately benefiting sovereign bonds. The yield on two-year German government bonds fell by two basis points, to 3.189%, while that of the ten-year Bund fell by more than four points, to 2.477%.
In the United States, the rates vary little before the hearing Wednesday of the chairman of the Federal Reserve, Jerome Powell, by Congress. The yield on ten-year Treasuries stands at 3.777% and that on two-year bonds at 4.7232%.
CHANGES
The yuan fell near a seven-month low after China lowered two benchmark rates.
The dollar was virtually unchanged against a basket of currencies, with the euro trading at $1.0931 (+0.06%), while the pound fell to $1.2767 (-0.19%).
OIL
The deterioration in China’s growth outlook has not weighed on oil markets, which are focused on stronger-than-expected global demand this year.
Brent rose 0.68% to 76.61 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.43% to 72.09 dollars.
NO MAJOR ECONOMIC INDICATOR ON TODAY’S AGENDA
(Report Corentin Chapron, edited by Blandine Hénault)
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