by Laetitia Volga
PARIS (Reuters) – Major European stock markets are expected to rise on Monday as bond yields fall as investors hope for a slower rate hike by the Federal Reserve (Fed) in December.
Futures contracts give an increase of 0.54% for the CAC 40 in Paris, 1.03% for the Dax in Frankfurt and 0.92% for the EuroStoxx 50. The FTSE in London is expected around balance.
European stocks and Wall Street ended in the green on Friday following information from the Wall Street Journal according to which members of the Fed wanted to open the debates at the meeting of November 1 and 2 on a slowdown in monetary tightening in december.
Markets are still pricing in a 75 basis point rate hike next month but have lowered expectations of a similar rise in December. According to the CME Group’s FedWatch barometer, investors estimate a 42% probability of a three-quarter point hike in the fed funds rate in December, compared with around 66% a week ago.
Still on the monetary level, the week that opens is that of the European Central Bank, which will make its announcements on Thursday, and the markets are widely anticipating a further rate hike of 75 basis points.
A large number of company results are also on the program for the week, with the major American technology groups in particular. Before all this, the morning in Europe will be animated by the publication of the first results of the PMI surveys of IHS Markit on the activity of the private sector.
VALUES TO FOLLOW:
AT WALL STREET
The New York Stock Exchange ended higher on Friday after the publication of the Wall Street Journal article on the Fed.
The Dow Jones index gained 2.47% to 31,082.56 points, the S&P-500 gained 2.37% to 3,752.75 points and the Nasdaq Composite advanced 2.31% to 10,859.72 points.
In values, Snap fell 28.1% after posting its weakest quarterly revenue growth in five years due to a drop in advertising revenue. In its wake, Meta lost 1.16% and Pinterest 6.40%.
Futures are signaling a moderately higher Wall Street open for the time being.
IN ASIA
The Nikkei in Tokyo gained 0.31%, close to 27,000 points, on Fed speculation and yen weakness.
In China, equity markets are in the red after the 20th Communist Party Congress during which President Xi Jinping was reappointed for a third term. The announcement of the composition of the permanent committee of the political bureau, where only Xi Jinping loyalists are present, raises fears that the latter will reinforce his ideological policies to the detriment of economic growth.
The CSI 300 large cap index fell 2.72% and the Shanghai SSE Composite 1.86%. The Hong Kong Hang Seng fell 6.28% to its lowest level since 2009.
“The message is clear: the ‘zero COVID’ policy, the shared prosperity agenda and sectoral repressions are not going away any time soon,” said Ales Koutny at Janus Henderson Investors, adding that these risks would limit the country’s annual growth to only 2% or 3%.
In the third quarter, GDP grew by 3.9% over one year, a rate higher than expected.
RATE
Yields on US Treasury bonds fell in Asian trading: the ten-year fell seven basis points to -0.075%.
On the European market, the ten-year German also fell in early trading to 2.335%.
CHANGES
The dollar was stable against other major currencies (-0.03%) and the single European currency fell to 0.9852 dollars (-0.08%).
The yen is falling again against the dollar after gaining almost 1.4% in session in a sudden movement which suggests that the Bank of Japan, acting on behalf of the Ministry of Finance, may have intervened again to stem the prolonged decline. of the currency.
According to the Financial Times, the BoJ may have sold at least $30 billion on Friday.
Across the Channel, the pound gains 0.58% against the greenback. Ex-Prime Minister Boris Johnson announced his withdrawal from the Conservative Party presidential race on Sunday, putting former finance minister Rishi Sunak in a good position for the job and becoming the next tenant of 10 Downing Street .
OIL
The oil market is retreating, as statistics released in China showed a slowdown in crude imports year on year in September.
Brent lost 0.98% to 92.58 dollars a barrel and American light crude (West Texas Intermediate, WTI) 1.16% to 84.06 dollars.
(Written by Laetitia Volga, Editing by Kate Entringer)
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