The Milan Stock Exchange
PARIS (Reuters) – Wall Street is expected to fall on Tuesday, while European stock markets decline, worried about the Chinese economic situation and cautious before the publication of data on retail sales in the United States.
New York index futures suggest a lower opening for Wall Street, with the Dow Jones down 0.63%, while the Standard & Poor’s 500 is down 0.62% and the Nasdaq 0.63%.
In Paris, the CAC 40 dropped 1.37% to 7,247.91 points around 10:40 GMT, against a drop of 1.57% for the FTSE in London, and a decline of 1.1% for the Dax in Frankfurt.
The pan-European FTSEurofirst 300 index sank 1.12%, against 1.23% for the EuroStoxx 50 and 1.08% for the Stoxx 600.
Markets digest data on Chinese retail sales and industrial production, below market consensus, while data on new real estate projects under construction show that the area under construction is down 25% year on year – while that the situation had already deteriorated last year.
The cut in medium-term loan rates to financial institutions, decided by the Chinese central bank and which surprised the markets by its magnitude, was not enough to improve sentiment.
“From a macroeconomic perspective, the decisions taken on Tuesday are quite helpful and will help improve the debt service capacity of cash-strapped local governments and real estate companies,” ING analysts said.
“But that’s not a game-changer, and so we don’t think market sentiment will improve dramatically after this decision alone.”
The publication of US retail sales at 12:30 GMT also urges investors to be cautious, as a figure that surprises on the upside could revive fears that the Federal Reserve will raise its rates again in September to cool activity.
RATE
Yields are rising on both sides of the Atlantic as investors position themselves ahead of US data that could indicate US growth is more resilient than expected.
The ten-year Treasury yield rose 5.3bp to 4.2346%, with the two-year remaining stable at 4.9714%.
The German ten-year yield climbed 8.1bp to 2.718%, its highest since March, while that of the two-year rate remained unchanged at 3.151%.
THE VALUES TO FOLLOW IN WALL STREET
Berkshire Hathaway on Monday released its second-quarter investment performance, which includes the sale of nearly half of its stake in General Motors. Among other notable investments, the conglomerate favored homebuilders DR Horton, Lennar and NVR, and increased its stake in Capital One.
VALUES TO FOLLOW IN EUROPE
The real estate sector fell with the rise in yields and posted the worst sector performance of the index, down 1.93%. In France, Unibail Rodamco is at the bottom of the CAC 40, declining by 2.56%.
Marks & Spencer posts one of the best performers in the Stoxx 600, up 7.04%, after raising its outlook for fiscal year 2023. The retail sector registers one of the best performers of the Stoxx 600 sectors , down 0.30%, in the wake of the British group.
CHANGES
The Euro rose after the ZEW indicator unexpectedly firmed in August, although it remains in negative territory. The dollar lost 0.17% against a basket of benchmark currencies, the euro advancing 0.27% to 1.0933 dollars, while the pound sterling climbed 0.21% to 1.2706 dollars.
OIL
Oil pulled back in a choppy session as markets worried about the implications of Chinese data on crude demand.
Brent fell 0.49% to $85.79 a barrel, with US light crude (West Texas Intermediate, WTI) falling 0.64% to $81.98.
(Writing by Corentin Chapron, editing by Kate Entringer)