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by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to rebound slightly on Tuesday the day after a drop linked to fears about the pace of reduction of the Fed’s key rates, while the European stock markets are in the red at mid-session, weighed down by luxury and basic resources in reaction to announcements from China.
New York index futures signal Wall Street opening up 0.15% for the Dow Jones, 0.40% for the Standard & Poor’s 500 and 0.50% for the Nasdaq after a drop of more by 1% of the indices on Monday.
The markets are awaiting the publication of the minutes of the latest Fed meeting on Wednesday and an inflation indicator in the United States on Thursday. Adriana Kugler, member of the Board of Governors of the Federal Reserve, argued Tuesday in favor of further reductions in borrowing costs in the United States.
In Paris, the CAC 40 lost 0.61% to 7,529.49 points around 11:15 GMT. In Frankfurt, the Dax fell 0.19% and in London, the FTSE, rich in raw materials, lost 1.14%.
The pan-European FTSEurofirst 300 index fell by 0.53% and the eurozone’s EuroStoxx 50 by 0.45%. The Stoxx 600 lost 0.49% after falling during the session to 514.10 points, a low since September 23.
China imposed provisional anti-dumping measures on Tuesday on imports of certain spirits from the European Union (EU), in retaliation for the proposed customs duties on Chinese electric vehicles adopted by the Twenty-Seven.
Furthermore, China, while saying on Tuesday that it was “fully confident” in achieving its economic growth objective, refrained from announcing stronger budgetary measures, causing disappointment among investors who had bet on a more major recovery plan from the authorities.
“The announced measures are an important first effort by China, but the market simply wants more and China has not yet achieved that,” said Fiona Cincotta, market analyst at City Index.
On the stock market, LVMH, the manufacturer of Hennessy cognac, lost 3.26% in a context of generalized decline in luxury values, with a Milan-based trader citing fears that the sector would in turn be targeted by Chinese measures on imports. . Kering, Burberry and Hermès dropped by 1.01% to 4.60%, while the European luxury index lost .41%.
The two main French spirits manufacturers, Rémy Cointreau, producer of Rémy Martin cognac, and Pernod Ricard, fell by 8.03% and 3.42% respectively. The European drinks and food index declines by 0.74%.
The basic resources compartment (-3.76%), sensitive to China, is also losing ground with the decline in copper and iron ore prices. Anglo American, Antofagasta and Rio Tinto lost from 4.50% to 4.99%.
In terms of indicators in Europe, German industrial production increased by 2.9% in August over one month, driven in particular by the automobile sector.
VALUES IN EUROPE
In corporate news, Imperial Brands is up 3.77%, as cigarette maker Winston announced it expects growth of 20% to 30% in revenue from next generation products (NGP) for the 2024 financial year.
Vistry falls 22.46% as the British housebuilder cut its profit outlook for the 2024 financial year, due to a rise in construction costs in one of its divisions.
VALUES TO FOLLOW AT WALL STREET
Pepsico fell 1% in pre-market trading after reporting a surprise drop in its third-quarter revenue on Tuesday.
Honeywell International takes 2.9% in pre-market trading, the group having announced on Tuesday its intention to split and separately list its advanced materials activity.
RATE
Sovereign bond yields in Europe and the United States are generally stable after four sessions of increases linked to a massive sale of American Treasury bonds against a backdrop of solid macroeconomic data in the United States.
The ten-year German Bund rate stands at 2.256% and that of American Treasuries of the same maturity at 4.0197%.
CHANGES
The dollar fell on Tuesday, by 0.16%, against a basket of reference currencies, after having climbed in recent days to a multi-week high, traders having significantly revised downwards their outlook on the expected monetary easing from the Fed after a particularly strong employment report in the United States published on Friday.
The euro rebounded by 0.13%, to $1.0988, after a seven-week low hit last week, at $1.09515.
The pound sterling is trading at $1.3094 compared to a three-week low reached Monday at $1.30595.
OIL
Oil prices are declining on Tuesday as fears of a possible disruption to crude supplies ease as the market still awaits an Israeli response to last week’s Iranian attacks.
Brent lost 1.98% to $79.33 per barrel and American light crude (West Texas Intermediate, WTI) lost 2.09% to $75.51 after an increase of more than 3% on Monday.
Ashley Kelty, analyst at Panmure Liberum, believes crude prices are likely to remain volatile, while profit-taking in the sector could put pressure on the market in the absence of a material change in the situation in the Middle East .
(Written by Claude Chendjou, edited by Blandine Hénault)
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