* European indices expected to decline
* Return of tensions on Taiwan
* The “futures” US and Asia are retreating
* Ten-year Treasuries yield at lowest since April
by Laetitia Volga
PARIS, Aug 2 (Reuters) – The main European stock markets are expected to fall on Tuesday at the opening in the wake of Asian markets due to renewed tensions between China and the United States over Taiwan and concerns over the slowdown in the global economy, two factors that favor Treasury bonds as a safe haven.
The first indications available indicate a drop of 0.61% for the Paris CAC 40, 0.76% for the Dax Frankfurt, 0.6% for the FTSE London and 0.7% for the EuroStoxx 50.
According to several sources, Nancy Pelosi should go to Taiwan during the day while China has warned several times against a visit by the president of the American House of Representatives to the island which it considers to be part of its territory.
Beijing has sent several planes to fly over near the boundary line of the sensitive Taiwan Strait, a source said, while several Chinese warships had already been in the area since Monday.
“It may just be a storm in a teacup, but international and Taiwanese investors are quite worried,” said Stephen Innes at SPI Asset Management.
In addition to developments on the Sino-American file, fears of recession remain the main source of concern for world markets. Data released Monday in China, Europe and the United States signaled a weakening in industrial activity, keeping oil prices under pressure.
VALUES TO FOLLOW:
IN ASIA
In China, tensions between Washington and Beijing resulted in a drop of 1.93% for the large cap CSI 300 and 2.33% for the Shanghai composite index.
In Tokyo, the Nikkei fell 1.3%, the lowest in a week, under the influence of diplomatic concerns between China and the United States and the rise of the yen against the dollar which penalizes the many exporting stocks of the rating.
Tokyo Electron, Fanuc, Toyota Motor and Daikin Industries lost between 1.85% and 3.06%.
AT WALL STREET
US “futures” suggest a slightly lower opening following a session in the red, due to the decline of companies in the energy sector.
On Monday, the Dow Jones index lost 0.14% to 32,798.4 points, the S&P-500 lost 0.28% to 4,118.62 points and the Nasdaq Composite fell 0.18% to 12,368.98 points.
The energy compartment fell by 2.2% and Exxon Mobil by 2.5%, among the first contributors to the decline of the S&P-500.
Boeing rose 6.13% after two sources told Reuters that the US Federal Aviation Administration had approved the planemaker’s plan to resume deliveries of 787 Dreamliners.
RATE
Aversion to risky assets favors bonds and weighs on their yields: that of ten-year Treasuries lost six basis points to 2.5445%, the lowest in four months.
CHANGES
The dollar fell for the fifth session in a row against a basket of benchmark currencies (-0.2%), as traders continued to position themselves for a possible slowdown in the pace of rate hikes by the Federal Reserve.
The euro is displayed at 1.0271 dollars.
The yuan on the “offshore” market hit a low in session since mid-May due to tensions surrounding Nancy Pelosi’s visit to Asia and the disappointment of the latest Chinese economic indicators.
The Taiwanese dollar fell to its lowest level in more than two years.
PETROLEUM
Oil prices are falling after data indicating a slowdown in global manufacturing activity in a context of weak demand.
Brent fell 0.75% to 99.28 dollars a barrel and American light crude (West Texas Intermediate, WTI) 0.62% to 93.31 dollars.
NO MAJOR ECONOMIC INDICATOR THE AGENDA OF THE DAY (Rdig by Laetitia Volga, said by Kate Entringer)