by Claude Chendjou
PARIS (Reuters) – Wall Street is expected to rise on Tuesday at the open, while European stocks are moving on an undecided note at mid-session, the positive trend being fueled by hopes of lower inflation in the United States and a relaxation in relations between Washington and Beijing at the opening of the G20 summit in Bali, Indonesia. Futures on New York indices signal an opening of Wall Street up 0.31% for the Dow Jones, 0.7% for the Standard & Poor’s 500 and 1.13% for the Nasdaq. In Paris, the CAC 40 took 0.31% to 6,629.8 around 12:15 GMT. In Frankfurt, however, the Dax fell 0.1% and in London, the FTSE lost 0.01%.
The pan-European FTSEurofirst 300 index gained 0.1%, the Eurozone EuroStoxx 50 0.18% and the Stoxx 600 0.04%.
After last week’s US consumer price (CPI) data showed a sharper-than-expected slowdown in inflation, investors are hoping that the producer price (PPI) data, expected at 1:30 p.m. GMT, will also be a pleasant surprise.
The Reuters consensus expects PPI growth to slow to 8.3% year on year in October from 8.5% in September.
On a geopolitical level, US President Joe Biden and his Chinese counterpart Xi Jinping both called on Monday for improved relations between Washington and Beijing, while the IMF called on the G20 to resist the temptation of protectionism which could curb the growth. In Europe, Emmanuel Macron has called for more cooperation with China on Ukraine as the draft G20 final declaration is expected to state that “most” G20 countries condemn the war in Ukraine.
In terms of the day’s economic statistics, investor sentiment in Germany has improved further since the start of November (-36.7 after -59.2 in October), driven by hopes of an upcoming drop in the Inflation, shows the ZEW index, while economic growth in the Eurozone was unsurprisingly confirmed by Eurostat at 0.2% in the third quarter.
VALUES IN EUROPE
Among the major compartments of the European dimension, the increase is led by services to communities (+0.91%) and new technologies (+0.38%). Conversely, distribution (-1.92%) and telecoms (-0.71%) are among the most significant declines.
In individual stocks, Vodafone dropped 5.85% after lowering its free cash flow forecast amid rising costs. The British telecoms group further explained that its annual profit would now be at the lower end of the initially forecast range.
In “utilities”, the specialist in renewable energies Drax Group takes 3.28%, while Centrica, the owner of British Gas, advances by 3.93% thanks to the launch of a share buyback program.
In Paris, Orpea fell 4.60% in response to a series of searches carried out on Tuesday in several establishments of the group as part of an investigation for “institutional abuse”. This information takes precedence over the presentation of the group’s “transformation plan” which allowed the action in the morning to appear in the green.
Teleperformance, whose stock tumbled last week on suspicion of labor violations in Colombia, rebounded 10.65%, buoyed by a buy recommendation from Citigroup.
Renault gains 0.62%, the chairman of the diamond group’s board of directors having declared that there was no blockage in the discussions with its Japanese partner Nissan.
CHANGES
The dollar, which hit a three-month session low, fell 0.52% against a basket of benchmark currencies, ahead of US producer price data.
The euro took the opportunity to rise to 1.0405 dollars (+0.77%), the highest since early July, supported by the latest economic statistics, including investor sentiment in Germany.
Banque de France Governor Francois Villeroy de Galhau further said on Tuesday that the European Central Bank (ECB) is likely to continue raising interest rates beyond 2%, even if “jumbo” rate hikes “will not become the norm.
RATE
Bond yields are falling as investors try to digest the latest comments from US Federal Reserve (Fed) officials as they await new inflation data. Lael Brainard estimated on Monday that the US central bank should soon start to reduce the pace of its rate hikes.
The ten-year appears at 3.8087%, down about six basis points.
In Europe, the yield of the German Bund with the same maturity is trading at 2.073%, down about eight basis points.
OIL
Oil prices are once again affected by fears over Chinese demand amid an increase in the number of COVID-19 cases in the country.
Brent lost 0.38% to 92.79 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.50% to 85.44 dollars a barrel.
(Written by Claude Chendjou, edited by Kate Entringer)