by Blandine Henault
(Reuters) – The main European stock markets are expected to fall slightly at the opening on Tuesday, in the wake of a mixed session in Asia despite the announcement of a rate cut of an unprecedented magnitude in China.
The stock markets also lack catalysts due to the absence of Wall Street the day before and a lighter agenda in terms of economic indicators.
Futures contracts predict a decline of 0.06% for the CAC 40, 0.28% for the Dax in Frankfurt, 0.14% for the FTSE in London and 0.22% for the Stoxx 600.
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European indices do not have the support of Asia, where Chinese stock markets struggled despite the announcement of a greater drop than expected by the People’s Bank of China (PBC) in its five-year prime loan rate.
This LPR rate was reduced by 25 basis points, to 3.95% compared to 4.20% previously, the largest drop since it was implemented in 2019.
“This change comes as a surprise because the BPC did not lower its medium-term loan facility (MLF) rate this month,” note in a note the analysts at Société Générale Cross Asset Research, who believe that this shows a targeted approach intended to specifically support the real estate sector.
“Chinese interest rates will continue to fall but the BPC will not make it easy for us to capture overall progress through targeted measures and the pace may not be as fast as necessary,” they add.
VALUES TO FOLLOW:
The market has taken note of new publications of company results with Air Liquide and Barclays. The distribution sector will also be in the spotlight with the expected accounts from Walmart and Carrefour (after the stock market).
A WALL STREET
Futures on New York indices are currently reporting a decline of around 0.2% on Tuesday after the long weekend due to a public holiday.
IN ASIA
The Tokyo Stock Exchange ended down 0.28%, the absence of catalysts having favored profit-taking after the recent historic high.
In China, the stock markets erased their initial losses at the end of the session, while the BPC’s decision struggles to restore investor confidence in the prospects of the real estate market and the economy as a whole.
The large-cap CSI 300 gained 0.21% after losing as much as 0.7% while the Shanghai Stock Exchange Composite Index rose 0.42%.
The Chinese real estate compartment (+0.57%) benefited from the BPC’s announcements.
CHANGES
The BPC’s decision had only a limited impact on the yuan, which fell to its lowest level since November 20 before erasing its losses.
For its part, the Japanese yen is falling against the dollar and remains close to a three-month low, penalized by the divergent outlook for monetary policy in the United States, where rates could remain high for longer than expected, and in Japan. , where the market doubts an imminent exit from ultra-accommodating policy.
The yen fell 0.13% to 150.3 yen per dollar.
For its part, the euro changes little, at 1.077 dollars.
RATE
On the bond market, variations are also limited.
The yield on ten-year Treasuries is practically stable, at 4.293%. Its German equivalent, benchmark for the euro zone, lost one basis point, to 2.4%.
OIL
Crude prices vary little and remain at three-week highs, still supported by geopolitical tensions in the Middle East and the recovery in Chinese demand.
The barrel of Brent from the North Sea is almost unchanged at 83.48 dollars and that of American light crude (WTI) gains 0.3% to 79.43 dollars.
(Written by Blandine Hénault)
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