A French national flag flies over the Palais Brongniart, the former Paris Stock Exchange
by Claude Chendjou
The main European stock markets are expected to rise on Wednesday as the latest projections on the American presidential election give a very clear lead to former Republican President Donald Trump over his Democratic rival, outgoing Vice-President Kamala Harris.
According to the first available indications, the Parisian CAC 40 should gain 1.14% at opening. The Dax in Frankfurt could advance by 0.78%, while the FTSE 100 in London should gain 0.93%. The EuroStoxx 50 index is expected to increase by 0.66% and the Stoxx 600 to increase by 1.08%.
In the markets, US stock futures and the dollar jumped on Wednesday in Asia, with investors betting more than ever on a Donald Trump victory. The Republican candidate, credited with 265 electoral votes, compared to 194 for Kamala Harris, claimed victory in front of his supporters in Florida. The Republicans have also taken control of the Senate, while suspense remains in the House of Representatives.
In addition to politics, for today's session, on the economic indicators side, there are producer prices in the euro zone and figures for service activity in several European countries. On Monday, PMIs showed that the eurozone manufacturing sector contracted for the 28th month in a row, but at a slower pace than previously.
Monetary policy should also occupy a certain place on the agenda of the day, notably with the decision of the Riksbank in Sweden and interventions by the president of the European Central Bank (ECB) Christine Lagarde and her vice-president Luis de Guindos . The American Federal Reserve (Fed) will announce its decision on its rates on Thursday.
The results season also continues with Crédit Agricole and Teleperformance in Paris, and in the rest of Europe, Commerzbank, NovoNordisk and Marks & Spencer.
A WALL STREET
The New York Stock Exchange ended sharply higher on Tuesday after the publication of indicators highlighting the strength of the American economy.
The Dow Jones index gained 1.02%, or 427.28 points, to 42,221.88 points.
The broader S&P-500 gained 70.07 points, or 1.23%, to 5,782.76 points.
The Nasdaq Composite advanced 259.19 points (1.43%) to 18,439.171 points.
The monthly survey from the Institute for Supply Management (ISM) published Tuesday showed an unexpected increase in activity in the services sector in October in the United States.
In stocks, Boeing experienced a volatile session after reaching a salary agreement with its employees to end a seven-week strike. The stock ended down 2.62%.
Palantir, for its part, soared 23.5%, the data analysis specialist having raised its annual turnover forecast for the third time.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index ended with a gain of 2.61% to 39,480.67 points, supported by defense and electronic chip stocks. The broader Topix gained 1.94% to 2,715.92 points.
Semiconductor group Advantest climbed 8.16%, leading the Nikkei, while IHI soared 19.28% as the heavy machinery maker raised its annual net profit forecast for the fiscal year closed March 2025. Mitsubishi Heavy Industries and Kawasaki Heavy Industries advanced 9.85% and 7.34%, respectively.
“This is a typical case of the Trump trade,” explains Takashi Hiroki, chief strategist at Monex, referring to assets that react in anticipation of a Donald Trump victory. The Republican candidate should ask Japan to depend less on the United States for its own defense.
The MSCI index bringing together stocks from Asia and the Pacific (excluding Japan) lost 0.68%.
In China, the Shanghai SSE Composite fell by 0.09% and the CSI 300 fell by 0.50% as investors analyzed the possible implications for the Chinese economy of a Donald Trump victory.
VALUES TO FOLLOW IN EUROPE:
CHANGES
The US dollar rose on Wednesday, gaining 1.58% against the main reference currencies, including the euro, which fell 1.74%, to 1.0741 dollars. Donald Trump's economic program, which notably provides for a strengthening of customs duties, supports the dollar index which climbed to a four-month high, at 104.99 points.
Bitcoin jumped 7.90% after reaching a record of $75,389. Donald Trump is considered more supportive of cryptocurrencies than Kamala Harris.
RATE
The yield on ten-year US Treasury bonds soared 12.6 basis points to 4.4138%, after hitting a four-month high during the session at 4.4471%. The two-year rate rises 6.3 basis points, to 4.2658%.
Investors believe that Donald Trump will revive inflation and worsen the United States budget deficit.
“If we look at the long end of the (yield) curve, it reflects the fact that both candidates are not exactly fiscal conservatives, they are both willing to print fiscal money,” Arnim Holzer said , macroeconomic strategist at Easterly EAB Risk Solutions.
The ten-year German Bund yield fell 4.5 basis points, to 2.386%.
OIL
The oil market fell sharply on Wednesday, the dollar having strengthened against a backdrop of anticipation of a possible victory for Donald Trump: Brent fell by 1.40% to 74.45 dollars per barrel and American light crude ( West Texas Intermediate, WTI) lost 1.36% to 7&.01 dollars.
MAIN ECONOMIC INDICATORS ON THE AGENDA FOR NOVEMBER 6:
COUNTRY GMT INDICATOR PERIOD PREVIOUS CONSENSUS
FR 08:50 Services PMI Oct. 48.3 48.3*
(final)
FR 08:50 PMI index Oct. 47.3 47.3*
composite(definitive)
FROM 8:55 a.m. Oct. PMI 51.4 51.4*
services (definitive)
FROM 8:55 a.m. PMI Oct. 48.4 48.4*
composite(definitive)
EZ 09:00 Oct PMI 51.2 51.2*
services (definitive)
EZ 09h00 Indice PMI oct. 49,7 49,7*
composite(definitive)
EZ 10:00 a.m. Producer prices Sept. -0.6% 0.6%
*first estimate
(Writing by Claude Chendjou, edited by Kate Entringer)
