European stock markets are expected to rise, but the trend remains fragile

Letitia Volga

PARIS (Reuters) – Major European stock markets are expected to open higher on Wednesday, thanks to Wall Street’s gains the day before, although investors remain cautious amid inflation worries and monetary tightening.

The first available data points to a rise of 0.26% for the Paris CAC 40, 0.44% for the Dax in Frankfurt, 0.29% for the FTSE in London and 0.53% for the EuroStoxx 50.

Wall Street’s major stock indexes rose almost 1% on Tuesday, driven by gains in technology stocks, energy stocks and lower US bond yields.

European equities should take advantage of this positive momentum for a recovery, but market sentiment remains fragile as investors expect further monetary tightening from the Federal Reserve next week and more restrictive rhetoric from the European Central Bank on interest rates on Thursday in the face of rising inflation.

The market is waiting for the publication of monthly data on US consumer prices on Friday to see more clearly the path of inflation and therefore the policy of the Fed.

ON WALL STREET

The Dow Jones rose 0.80% to 33,180.14 on Tuesday, the S&P-500 added 0.95% to 4,160.68 and the Nasdaq Composite rose 0.94% to 12,175.23. [.NFR]

Under the influence of Apple (+1.76%) and Microsoft (+1.39%), the technology sector grew by 1%.

Meanwhile, Target’s shares fell 2.3% after announcing they were being forced to offer higher discounts to shoppers and cut stocks of high-margin essentials.

For now, the futures offer a slightly lower open rate as the 10-year Treasury yield has risen to 3%.

IN ASIA

In Tokyo, the Nikkei climbed 0.87% as Wall Street’s gains benefited tech stocks the day before, while the energy sector benefited from high oil prices.

The contraction of the Japanese economy in the first quarter was also revised downward to 0.5% year on year after 1.0% announced in the first assessment.

In China, major stocks are in the red as shares in battery maker CATL (-6.86%), a supplier of Tesla, fell after reports that BYD (+1.57%) is now to supply batteries to a US auto group. .

The CSI 300 lost 0.34% and the Shanghai SSE Composite lost 0.52%.

CHANGES

The dollar gained 0.22% against a basket of international currencies, while the euro shed 0.09% against the US dollar to hit 1.0689.

During the session, the yen hit new seven-year lows against the euro and 20-year lows against the dollar due to a divergence in monetary policy between the Bank of Japan, the ultra-accommodative, and other central banks, including the ECB and the Fed.

EVALUATE

In the bond market, 10-year Treasury yields edged up four basis points to 3.0104% as investors expect another 50 basis point Fed rate hike next week and also at the July meeting.

OIL

The oil market rises slightly ahead of the release at 14:30 GMT of data on US crude oil inventories from the Energy Information Administration (EIA).

Brent 0.32% to $120.95 a barrel and US Light Oil (West Texas Intermediate, WTI) 0.45% to $119.95.

(Written by Laetitia Volga, edited by Nicolas Delam)