PARIS (Reuters) – Wall Street is expected to be hesitant on Monday, while European stock markets decline mid-session, under pressure from still degraded activity indices.
New York index futures suggest a mixed Wall Street opening, with the Dow Jones and Standard & Poor’s 500 stable, and the Nasdaq rising 0.21%.
In Paris, the CAC 40 declined by 0.34% to 7,110.56 points around 10:42 GMT, compared to 0.38% for the FTSE in London, and 0.22% for the Dax in Frankfurt.
The pan-European FTSEurofirst 300 index lost 0.46%, compared to 0.32% for the EuroStoxx 50 and 0.41% for the Stoxx 600.
The improvement on the markets linked to the sharper than expected drop in inflation in the euro zone and the United States on Friday was short-lived.
The PMI manufacturing activity indicators, published on Monday, reminded us that the European economic situation was clearly deteriorating.
In the euro zone, the slowdown is profound and widespread, marked by a sharp reduction in demand despite a decline in ex-factory prices.
In Germany, the region’s largest economy, activity is still slowing, even if economists are starting to hope for a recovery at the start of next year.
Another indicator that worried the markets, the unemployment rate in Europe remains at its historic low, according to data published Monday by Eurostat, an enigma in a context of slowing growth and deterioration of economic prospects.
ING strategists cite several reasons, including “good performance in several sectors, labor hoarding, sick leave and a reduction in working hours”.
However, “some of these factors do not necessarily have a cyclical behavior, which makes it difficult to assess the evolution of unemployment over the coming quarters.”
Central banks also remain focused on their inflation objectives, as recalled on Monday by Luis de Guindos, vice-president of the European Central Bank (ECB), who once again rejected the idea of a reduction rate and said returning to the 2% inflation target would not be easy, according to the Financial Times.
VALUES TO FOLLOW IN WALL STREET
Nvidia advances 1.5% before the opening, supported by the increase in recommendation from Goldman Sachs to “conviction buy”.
VALUES TO FOLLOW IN EUROPE
Edenred posted the biggest drop in the CAC40, down 8.23%, after Minister Olivia Grégoire raised on Monday the possibility of capping commissions charged to restaurateurs on restaurant vouchers. Sodexo, which is also affected, fell 3.75%, among the worst performances of the Stoxx 600.
Casino lost 5.85% after the official transfer of 61 stores to Intermarché (Groupement les Mousquetaires), an operation intended to reduce the debt of the Saint-Etienne group.
Vivendi advances by 1.90%, the largest increase in the CAC 40, thanks to the increase in Barclays’ recommendation to “overweight”.
Struggling artificial heart maker Carmat appeals to its main shareholders, led by Airbus, to invest new funds to avoid its collapse, and rises 3.88% after losing 37% in the week last.
RATE
Yields on long American securities are reaching new highs in a calmer market context, the risks linked to a “shutdown” of the American government having receded.
The ten-year Treasury yield rose 6 bps to 4.6309%, close to its highest level since 2007, with the two-year yield rising 6.2 bps to 5.1083%.
The yield on the German ten-year rose by 3.5 bps to 2.872%, close to its highest in 12 years, while that of the two-year rate remained at 3.207%.
CHANGES
The euro declines after sharply contracting PMI indicators.
The dollar gained 0.24% against a basket of reference currencies, the euro lost 0.31% to 1.0537 dollars and the pound sterling 0.34% to 1.2156 dollars.
OIL
Risk appetite is returning after a “shutdown” was avoided in the United States, with markets once again focusing on the restricted supply of crude oil.
Brent rose 0.88% to $93.01 per barrel, with American light crude (West Texas Intermediate, WTI) nibbling 0.82% to $91.53.
(Written by Corentin Chappron, edited by Kate Entringer)
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