by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to be practically stable at the opening on Monday after Friday’s sharp rise, while the European stock markets in turn progressed slightly mid-session, driven in particular by good industrial production figures in Germany .
Futures on New York indices signal an opening on Wall Street up 0.04% for the Dow Jones, 0.03% for the Standard & Poor’s 500 and 0.06% for the Nasdaq in a context of wait-and-see attitude.
In Paris, the CAC 40 advanced 0.58% to 8,107.71 around 11:30 GMT. In Frankfurt, the Dax increased by 0.62% and in London, the FTSE gained 0.17%.
The pan-European FTSEurofirst 300 index is up 0.28%, the eurozone’s EuroStoxx 50 is up 0.41% and the Stoxx 600 is up 0.27%.
The European indices which ended in the red on Friday, going against the trend on Wall Street where the American employment report showed a slowdown in wage growth, rebounded cautiously on Monday.
Gains are limited as investors keep an eye on the European Central Bank’s (ECB) monetary policy decisions scheduled for Thursday as doubts have recently emerged over the timing and pace of the interest rate cut anticipated by the markets.
The positive trend in Europe is fueled by cyclical compartments such as basic resources, automobiles and industrial goods and services while industrial production in Germany increased more than expected in February, by 2.1% month-on-month.
“Even if today’s industrial data are a balm for the German economy, it is not yet the start of a significant recovery,” noted ING analysts.
“The slight drop in interest rates (on the markets), anticipations of the next reductions in key rates from the European Central Bank, the fall in gas and electricity prices and the resilience of the American economy should nevertheless provide further relief to German industry in the coming months,” they added.
In other indicators of the day, investor morale in the euro zone, measured by the Sentix index, reached a two-year high in April, going from -10.5 in March to -5.9.
VALUES TO FOLLOW AT WALL STREET
In pre-market trading, Boeing fell by almost 1% and Southwest Airlines by 1.2% after a new incident on Sunday in Denver involving a Boeing 737-800 operated by the airline.
Tesla jumped 3.9% in pre-market trading, the group having announced Friday evening that it would present a “robotaxi” on August 8.
VALUES IN EUROPE
Believe fell 9.57%, Warner Music having announced on Saturday that it would not submit a takeover offer for the French digital music group.
Atos soars by 19.08%, Butler Industries having announced on Sunday that it had joined the group rescue plan led by Onepoint.
Vivendi gives up 0.84% while the Canal+ group, of which it is the owner, made a firm offer on Monday for the remaining capital of the South African broadcaster MultiChoice.
Bayer drops 1.22% despite the decision of a judge in the United States to reduce from $1.56 billion to $611 million the amount of compensation that the group must pay to three people claiming that the weedkiller Roundup is responsible of their cancer.
Zalando jumped 6.03% thanks to Citigroup’s raising of its recommendation from “neutral” to “buy” on the German online fashion retailer.
RATE
In the United States, the yield on ten-year Treasuries rose on Monday around seven basis points, to 4.4541%, after touching the threshold of 4.45%, a level not seen since November. Its increase is fueled by the solidity of the data from the employment report published on Friday while on Wednesday the figures for the evolution of consumer prices will be known.
Investors currently expect only a 53% probability of a first rate cut by the US Federal Reserve in June, according to the CME Group’s Fedwatch barometer.
In the euro zone, the yield on the ten-year German Bund rose by almost five basis points, to 2.449%.
CHANGES
The dollar is almost unchanged (+0.01%) against a basket of reference currencies despite the strong rise in the bond compartment.
“The latest developments have increased the risk that the (Fed) will lag behind other major central banks in lowering interest rates,” monetary analysts at MUFG bank wrote in a note.
“Another upside surprise in inflation could trigger a more radical reassessment of the Fed’s rate cut prospects and open the door to a breakout in the US dollar,” they also warn.
The euro, down 0.08%, is trading at $1.0826, while the pound sterling is trading at $1.262 (-0.13%).
OIL
Oil fell on Monday after the announcement on Sunday of the partial withdrawal of the Israeli army from the Gaza Strip, while ceasefire negotiations resumed in Cairo.
Brent lost 0.79% to $90.45 per barrel and American light crude (West Texas Intermediate, WTI) fell 0.78% to $86.23.
(Writing by Claude Chendjou, edited by Kate Entringer)
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