A trader on the New York Stock Exchange
by Claude Chendjou
Wall Street is expected to fall at the opening on Tuesday before the publication of an indicator on employment in the United States, while European stock markets are in the red at mid-session the day after investors’ relief linked to the results of the legislative elections in France. New York index futures indicate a Wall Street opening down 0.31% for the Dow Jones, 0.37% for the Standard & Poor’s 500 and 0.46% for the Nasdaq the day after a session in the green driven by new technologies. In Paris, the CAC 40 fell 0.86% to 7,496.34 points around 11:00 GMT. In Frankfurt, the Dax dropped 0.97% and in London, the FTSE fell 0.31%.
The pan-European FTSEurofirst 300 index fell by 0.68%, the Eurozone’s EuroStoxx 50 by 1% and the Stoxx 600 by 0.69%.
The rebound on Monday in the stock markets in Europe linked to the prospect of a Parliament in France without an absolute majority gave way on Tuesday to a certain caution which is observed by a slight tension on the rate of the French ten-year OAT which rose to 3.373% against 3.348% the day before.
Analysts expect the Bund-OAT spread to remain high until the second round of legislative elections scheduled for next Sunday as the various parties mobilize on Tuesday to avoid a three-way race with the National Rally (RN). Candidates for the second round must be submitted by 16:00 GMT. On the macroeconomic front, inflation in the eurozone slowed as expected to 2.5% year-on-year in June but the price of services remains high, according to preliminary data from Eurostat, which should not have an immediate impact on the upcoming decisions of the European Central Bank (ECB).
“It already seemed unlikely that the European Central Bank would cut interest rates at its July meeting, and June’s inflation data will reinforce the tendency for policymakers to act with great caution,” said Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics.
The eurozone unemployment rate remained stable at 6.4%. ECB President Christine Lagarde noted Monday that favorable economic developments were a sign that rate cuts were not urgent. STOCKS TO FOLLOW ON WALL STREET
Tesla is down 1.1% in pre-market trading ahead of the publication of its vehicle deliveries figures for the second quarter. The LSEG consensus is for a 6% decline, which would be the second quarterly decline, a first for the American manufacturer, in a context of strong competition in China and weak demand.
Microsoft, Apple and Amazon lost ground in pre-market trading after rising 2% to 3% on Monday.
EUROPEAN VALUES Sodexo fell 5.54% after reporting slightly lower-than-expected third-quarter revenue.
Teleperformance rose 4.76% after Morgan Stanley raised its recommendation on the group.
Richemont (+0.46%) is in the green after the appointment of Louis Ferla as CEO of Cartier.
Sainsbury’s fell 1.62% as the retailer reported a decline in first-quarter sales of its non-food products on Tuesday amid poor weather conditions.
Siemens Energy is up 4.01% after the energy engineering group announced it would recruit more than 10,000 employees by 2030.
HelloFresh jumped 9.48% as JPMorgan removed the meal kit delivery specialist from its “Negative Catalyst Watch,” citing stabilizing meal kit trends in North America.
RATES The yield on the ten-year German Bund is stable at 2.605% after rising by nearly 12 basis points (bps) the day before. That of the Italian BTP, up by around three points, is at a three-week high, while the French OAT is up nearly two points, at 3.364%, after gaining nearly six points on Monday.
The yield spread between the Bund and the ten-year OAT, which had fallen by six basis points on Monday, has risen to 75.85 basis points.
The yield on the 10-year U.S. Treasury note edged lower on Tuesday to 4.4514 percent, but rose nearly 14 basis points on Monday. Some analysts, including Christopher Wong, a currency strategist at OCBC, attribute the recent surge in U.S. bond yields to the prospect of Donald Trump winning the November presidential election. A new term for the billionaire could mean a resurgence of inflation as tariffs and government borrowing increase.
The market is also waiting for the Jolts survey on job openings in the United States at 14:00 GMT, a prelude to the official monthly report which will be published on Friday and which could give an indication of the American economy and the trajectory of the Fed’s rates.
CHANGES
The dollar strengthened Tuesday, by 0.13%, against a basket of benchmark currencies before the Jolts report and a speech by Jerome Powell, the Fed chairman, scheduled for the ECB forum held later in the day in Portugal. The euro fell by 0.21%, to $1.0715 and the pound by 0.07% to $1.2642.
The yen JPY=EBS fell to 161.745 per dollar on Tuesday, its lowest level in nearly 38 years, reflecting the divergence in monetary policy between the United States and Japan. Japan’s finance minister said authorities were vigilant about sharp moves in the foreign exchange market.
OIL
Oil prices, which are near a two-month high, are rising further amid expectations of higher demand during the summer season and possible supply disruptions from Hurricane Beryl.
Brent gained 0.74% to $87.24 per barrel and light American crude (West Texas Intermediate, WTI) advanced 0.76% to $84.01.
(Written by Claude Chendjou, edited by Kate Entringer)
