PARIS (Reuters) – Wall Street is expected to be mixed at the opening on Monday, while European stock markets hesitate at mid-session in a context of uncertainty over the evolution of the conflict in the Middle East.
Futures on New York indices suggest Wall Street opening in the red, with the Dow Jones gaining 0.36%, while the Standard & Poor’s 500 takes 0.23% and the Nasdaq is stable.
In Paris, the CAC 40 advanced 0.13% to 7,012.75 points around 10:55 GMT, compared to 0.42% for the FTSE in London, and an immobile Dax in Frankfurt. The pan-European FTSEurofirst 300 index is standing still, compared to an increase of 0.11% for the EuroStoxx 50 and 0.12% for the Stoxx 600.
Investors are anxiously following developments in the Middle East conflict, as Israel prepares for the invasion of Gaza – with the country’s Prime Minister Benjamin Netanyahu vowing to “destroy Hamas”.
If the financial impacts of the conflict remain limited for the moment, the main risk for the markets is an extension of the conflict to other countries in the region – in particular Iran, which pledged on Sunday not to become involved militarily against Israel as long as its interests or its citizens are not attacked.
The United States is also seeking to limit the extension of the conflict, and the sending – which has been delayed – of a second aircraft carrier to the area aims to discourage any external involvement in the fighting between Israel and Hamas.
“The relatively muted reaction from financial markets suggests that investors expect the conflict to remain contained, the least disruptive outcome (for markets),” say MUFG strategists.
Oil nonetheless remains above $90 per barrel, proof, according to the bank, that the geopolitical risk premium continues to be transmitted to the markets. In the medium term, the rebound in crude oil could pose risks of a resumption of inflation, while the Federal Reserve will meet in early November to decide on its monetary policy trajectory.
VALUES TO FOLLOW IN WALL STREET
Pfizer now forecasts 2023 revenue of between $58 billion and $61 billion, compared to the $67 billion to $70 billion previously announced, which could weigh on the stock and the pharmaceutical sector. The United States will take steps to prevent American chipmakers from taking advantage of a legal loophole to sell some advanced semiconductors to China, a U.S. official said. Nvidia was declining before opening.
VALUES TO FOLLOW IN EUROPE
The chairman of the board of directors of Atos, Bertrand Meunier, the target of criticism from minority shareholders for several weeks, has left his position, the French IT group announced on Monday, which lost 3.85%.
Telecom Italia lost 5.28% after the group said on Monday that the American fund KKR had submitted a firm offer for its landline network. The lack of clarity around the offer affects the stock.
BioNtech fell 8.46% after Pfizer lowered its full-year revenue forecast amid weaker than expected sales of its COVID-19 vaccines and treatments.
British online supermarket Ocado is down 4.64% after Barclays downgraded its recommendation to “underweight”. The basic resources sector gained 1.18%, the best progression of the Stoxx 600 sectors, supported by the rise in oil prices and new measures to support the real estate sector taken in China.
RATES Volatility remains in bond markets as investors seek safe assets amid concerns over the trajectory of rates in developed countries.
The yield on the ten-year Treasury rose by 6.4 bp to 4.6935%, the two-year by 1.7 bp to 5.0708%. The yield on the German ten-year rose by 5.4 bp to 2.786%, that of the two-year rate increased by 1.6 bp to 3.146%.
CHANGES
The dollar is giving up some of its gains amid a bond decline and high oil prices. The dollar lost 0.17% against a basket of reference currencies, the euro gained 0.2% to 1.053 dollars and the pound sterling 0.08% to 1.2151 dollars.
OIL Crude is hesitating after having exceeded 90 dollars, the markets worrying about a possible regional conflagration in the Middle East. Brent is stable at $90.88 per barrel, with light American crude (West Texas Intermediate, WTI) nibbling 0.19% to $87.86.
(Written by Corentin Chappron, edited by Kate Entringer)
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