EUROPEAN SCHOLARSHIPS DROP AT MID-SESSION, EXCEPT LONDON
by Marc Angrand
PARIS (Reuters) – Wall Street is expected to rise on Wednesday and could therefore regain some of the ground given up the day before but European stock markets, except London, retreated at mid-session after a series of Chinese economic indicators below expectations.
Futures on major New York indices are signaling an opening up 0.12% for the Dow Jones, 0.15% for the Standard & Poor’s 500 and 0.24% for the Nasdaq.
They lost 0.84%, 0.57% and 0.45% respectively on Tuesday, as economic uncertainties and fears of a heavier corporate tax in the United States prevailed over the announcement of ‘a slowdown in US inflation.
In Paris, the CAC 40 lost 0.55% to 6,616.41 points at 10:55 GMT and in Frankfurt, the Dax fell 0.23% while in London, the FTSE 100 took 0.1% thanks to the values of the energy and raw materials.
The EuroStoxx 50 index is down 0.42%, the FTSEurofirst 300 0.21% and the Stoxx 600 0.33%.
In China, industrial production rose only 5.3% year on year in August, its weakest annual growth since July 2020, and the evolution of retail sales, at only 2.5%, has slowed down much more than expected.
“China is unlikely to press the red button immediately to turn on the fiscal tap, but one more month of bad numbers could be a game-changer and we can expect the Bank’s reserve requirement ratio to drop soon by the People’s Bank of China, “said Jeffrey Halley, senior analyst at Oanda.
The economy is not the only cause for concern about China: The financial situation of Evergrande, the number two real estate company in the country, continues to worry, as does the number of COVID-19 cases in the country. Fujian province, and the announcement of a public inquiry into casinos in Macao has some fears that Beijing will take over the gaming sector.
The American session will be animated among other things by the figures of the “Empire State” activity index for September and those of industrial production in the United States in August.
VALUES IN EUROPE
The largest sector decline in Europe is for the distribution compartment (-2.01%), penalized by the Swedish H&M, which yields 3.7% after quarterly sales below expectations.
In Paris, luxury goods are once again suffering from news from China: LVMH is down 3.22%, Kering by 3.9% and Hermès by 1.18%.
On the upside, the energy compartment is benefiting from the rise in oil prices: its Stoxx index gained 0.96%, TotalEnergies 1.69% and BP 2.12%.
At 1.2752%, the yield on ten-year US Treasuries is virtually unchanged from its closing level on Tuesday, after the sharp drop caused by the slowdown in US inflation.
In Europe, benchmark yields, which followed the previous day’s downward movement, varied little at mid-session, at -0.34% for the ten-year German Bund and -0.01% for its French equivalent.
The announcement of a sharper-than-expected rise in industrial production in the euro zone in July did not elicit a noticeable reaction in the bond market.
The dollar, which had also fallen after the figures for US consumer prices, is still losing ground against other major currencies (-0.19%).
The euro climbed back to $ 1.1829, but did not regain its Tuesday high of 1.1845.
The pound is benefiting from the acceleration of inflation in the United Kingdom, to 3.2% year on year in August, its highest level in nine years.
The oil market is benefiting from the announcement, according to market sources, of a sharper-than-expected drop in crude stocks in the United States according to the American Petroleum Institute (API) as progress in vaccination gives hope increased demand.
Brent gained 1.28% to 74.54 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.38% to 71.43 dollars.
The Energy Information Administration (EIA) is due to publish at 14:30 GMT its own statistics on US stocks, which are expected to remain marked by the passage of Hurricane Ida over the Gulf of Mexico and Louisiana.
(Edited by Blandine Hénault)