Trading on the Frankfurt Stock Exchange
by Claude Chendjou
Major European stock markets are expected to rise cautiously on Tuesday as the US Federal Reserve (Fed) begins a two-day meeting at the end of which it is expected to announce a cut in its interest rates, with uncertainty surrounding the extent of this monetary easing.
According to the first available indications, the Parisian CAC 40 should rebound by 0.46% at the opening, the day after a session in the red. The Dax in Frankfurt could advance by 0.37%, while the FTSE 100 in London should gain 0.62%. The EuroStoxx 50 index is expected to increase by 0.39%. The Stoxx 600, which ended Monday slightly down with profit taking in the technology sector, is seen up by 0.49%.
The Fed will deliver its monetary policy decision on Wednesday, and observers are largely expecting a first rate cut after the aggressive monetary tightening cycle that began in March 2022 to combat high inflation.
“The market is probably pricing in too many (rate) cuts over the next 12 months. The Fed could disappoint market expectations in 2025, which would push U.S. Treasury yields higher next year,” warns Jill Hirzel, investment specialist at Insight Investment, a BNY Investments company.
For this first step expected on Wednesday, investors are divided between a reduction of 25 or 50 basis points in rates. If the latter option prevails, it could also be interpreted as a sign of fear of economic recession in the United States, which should not reassure in the long term. The publication in the afternoon of indicators of retail sales and industrial production should provide new elements on the state of the American economy.
Besides the Fed, rate decisions from central banks in Norway, the UK and Japan will also be on investors’ radar this week.
A WALL STREET
The New York Stock Exchange ended in mixed order on Monday with the Dow Jones in the green and the Nasdaq penalized by the decline in technology stocks.
The Dow Jones Industrial Average gained 0.55% to 41,622.08 points, after setting a record high following the unexpected rebound in the Empire State index. The broader Standard & Poor’s 500 gained 0.13% to 5,633.09 points. The Nasdaq Composite fell 0.52% to 17,592.127 points.
In terms of values, Apple lost 2.77% after disappointing returns on pre-orders of its new iPhones.
IN ASIA
After a long weekend due to a public holiday, on the Tokyo Stock Exchange, the Nikkei index fell by 1.57% on Tuesday, to 36,008.76 points. The broader Topix lost 1.44%, to 2,534.14 points. Japanese indices were penalized by the new technologies sector, including Tokyo Electron (-5.93%), Advantest (-5.66%), SoftBank Group (-3.70%) and Sony Group (-3.09%).
The MSCI index of Asia and Pacific stocks (excluding Japan) gained 0.10%.
In China, financial markets remain closed and will not reopen until Wednesday.
VALUES TO FOLLOW IN EUROPE:
CHANGES/RATES
The US currency is trading near its lowest levels since the start of the year, down 0.02% against a basket of benchmark currencies and 0.07% against the Japanese currency, which strengthened for a time at 140.33 yen to the dollar.
The euro is trading at 1.1123 dollars (-0.08%) but has reached a high since the beginning of the year, at 1.1201 dollars, in early trading in Asia.
The pound sterling is at 1.3198 dollars (-0.11%).
The yield on 10-year US Treasury bonds was virtually unchanged at 3.6232%, the day after an already sluggish session, a sign of investor caution.
OIL
The oil market continued its rise on Tuesday, remaining attentive to concerns about American production after the passage of Hurricane Francine and the prospect of a drop in crude stocks in the United States.
Brent gained 0.40% to $73.04 per barrel and US light crude (West Texas Intermediate, WTI) gained 0.61% to $70.52.
(Written by Claude Chendjou, edited by Bertrand Boucey)
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