German stock index DAX reacts to US elections in Frankfurt
by Claude Chendjou
PARIS (Reuters) – Major European stocks are expected to fall on Wednesday at the open, as investors are likely to exercise caution as they await the full results of the midterm elections in the United States, the battle for the control of the Senate promises to be very tight.
Index futures suggest a decline of 0.36% for the CAC 40 in Paris, 0.39% for the Dax in Frankfurt, 0.34% for the FTSE 100 in London and 0.29% for the EuroStoxx 50.
The first estimates give the Republicans a lead in the House of Representatives, which must be completely renewed. The Edison Research Institute estimates that five seats previously held by the Democrats have swung to the Republican side in the House, the number necessary for the party to obtain a majority there. In the Senate, renewed by a third, uncertainty still dominates concerning the disputed states of Pennsylvania, Nevada, Georgia and Arizona.
While it will likely take several days to know the full results of these elections, investors are also concerned about the monthly consumer price figures expected on Thursday. They hope to find signs on the evolution of economic conditions and the future path of interest rates.
The Reuters consensus expects the rise in inflation to slow to 8.0% year on year in October after 8.2% in September. With regard to interest rates, the markets estimate the probability of a rise of 50 basis points at 67% against 33% for a rise of 75 basis points in December.
In Europe, apart from the Banque de France’s monthly business survey at the end of October, which is expected to be published at 5:00 p.m. GMT, no major economic indicator is on the agenda.
The financial results published by Veolia, Scor, Adidas, Aviva, Pirelli and even Capri should also drive the trend.
AT WALL STREET
The New York Stock Exchange ended up on Tuesday, the market betting on an electoral victory for Republicans deemed more favorable to the interests of investors.
The Dow Jones index gained 1.02% to 33,160.83 points.
The S&P 500 climbed 0.56% to close at 3,828.13 points and the Nasdaq Composite gained 0.49% to 10,616.20 points.
IN ASIA
On the Tokyo Stock Exchange, the Nikkei index ended down 0.56% at 27,716.43 points and the broader Topix fell 0.41% to 1,949.49 points.
In China, the Shanghai SSE Composite lost 0.53% and the CSI 300 lost 0.93%.
Producer prices in China fell in October for the first time since December 2020, with the PPI index coming out down 1.3% year on year due to weak domestic demand, health restrictions and d gloomy real estate sector.
The rise in the consumer price index (CPI) slowed to 2.1% year on year, after a gain of 2.8% in September and a consensus of 2.4%.
RATE
The yield on 10-year US Treasury bills stands at 4.14%, up just under two basis points.
In Europe, the ten-year German Bund yield was almost stable in early trading, at 2.26%.
CHANGES
The dollar rose slightly, by 0.08%, against the other major currencies in anticipation of the complete results of the American elections and new data on inflation in the United States.
The euro fell 0.05% to 1.0067 dollars.
OIL
Oil prices are moving in mixed order amid an upsurge in COVID-19 cases in China and a better-than-expected rise in crude inventories last week in the United States. According to sources, citing figures from the American Petroleum Institute, these stocks rose by around 5.6 million barrels while the Reuters consensus was around 1.4 million.
Brent nibbles 0.01% to 95.35 dollars a barrel, while American light crude (West Texas Intermediate, WTI) yields 0.13% to 88.79 dollars a barrel.
(Written by Claude Chendjou, edited by Bertrand Boucey)