European stock markets are expected to open cautiously

(ABM FN-Dow Jones) The European stock markets will have a cautious opening on Tuesday. IG forecasts an opening loss of 5 points for the German DAX, a minus of 1 point for the French CAC 40 and a gain of 2 points for the British FTSE 100.

European stock markets were divided on Monday in the run-up to the Federal Reserve’s interest rate decision and US jobs reports later in the week.

“The market is currently estimating the first rate cut by the Fed after the US presidential election on November 5,” SEB said.

On a macroeconomic level, it was announced on Monday that consumer confidence in the euro zone improved further in April. The index that reflects confidence improved from -14.9 in March to -14.7 this month.

Spanish inflation data showed this morning that consumer prices unexpectedly rose in April, from 3.3 to 3.4 percent. A decline of up to 3.2 percent was expected. Furthermore, inflation in Belgium rose again in April, from 3.18 to 3.37 percent. Core inflation did fall, from 3.85 percent in March to 3.26 percent in April.

German inflation rose on a monthly basis in April from 0.4 percent to 0.5 percent. On an annual basis, inflation was 2.2 percent, the same as the previous month.

Company news

Deutsche Bank fell in Frankfurt, with a share price fall of approximately 8.5 percent. Deutsche Bank reported late Friday evening that a German court may partially agree to the claims of former Postbank shareholders, who believe that a higher price should have been paid in the 2010 takeover bid. Deutsche Bank still strongly disagrees with the assessment, but the bank does record a provision in the second quarter that will put pressure on profitability and capital ratio. The full amount of all claims, including cumulative interest, is estimated at around 1.3 billion euros, Deutsche Bank expects.

Bank shares elsewhere in Europe, such as BNP Paribas, ING and Barclays, traded mixed on Monday. BNP Paribas rose approximately 1.0 percent, ING lost 0.5 percent and Barclays was 0.1 percent lower. Commerzbank lost 2.6 percent.

RWE did good business in the DAX, with a gain of 2.5 percent and Siemens Energy gained 1.5 percent. Porsche AG also lost 0.2 percent. The manufacturer of luxury sports cars has recorded lower profit and turnover in the first quarter of 2024, which was also lower than expected, it was announced on Friday evening.

Eurofins Scientific was 3.6 percent higher in Paris. Tire manufacturer Michelin gained 2.0 percent in the CAC 40. Airbus lost 0.7 percent.

Philips led in Amsterdam, with a gain of no less than 29.4 percent, after the company announced a $1.1 billion settlement in the US regarding its sleep apnea devices. In the meantime, the share even rose more than 45 percent. According to ING analysts, the announcement came much earlier than expected. In the past quarter, Philips achieved a turnover of 4.14 billion euros, compared to 4.17 billion euros in the same period a year earlier. The analyst consensus expected 4.15 billion euros. Adjusted EBITA in the first quarter amounted to 388 million euros, compared to 350 million euros a year earlier and above the expectation of 361 million euros that analysts had expected in advance. Furthermore, the outlook was maintained and Philips became slightly more positive about the expected cash flow in 2024.

Exor, which is a shareholder in Philips, rose by 4.0 percent.

Euro STOXX 50 4,981.09 (-0.5%)

STOXX Europe 600 508.34 (+0.1%)

DAX 18,118.32 (-0.2%)

CAC 40 8,065.15 (-0.3%)

FTSE 100 8,147.03 (+0.1%)

SMI 11,332.36 (-0.1%)

AEX 882.27 (0.0%)

BEL 20 3,886.76 (+0.3%)

FTSE MIB 34,296.31 (+0.1%)

IBEX 35 11,100.80 (-0.5%)

US STOCKS

Wall Street opens fractionally lower on Tuesday, according to US futures.

US stock markets closed higher on Monday after a volatile final hour of trading, with the three major benchmarks swinging between mild gains and losses.

The earnings season kicks into gear again on Tuesday, when the figures for Amazon, McDonald’s and Coca-Cola are published. On a macroeconomic level, the Federal Reserve’s interest rate decision and the US jobs report on Wednesday and Friday successively dominate this week.

Chief economist Luc Aben of Van Lanschot Kempen expects that the Federal Reserve will not make concrete decisions during its policy meeting.

“It mainly remains to be seen what tone Chairman Powell will take. He recently suggested that the policy interest rate may have to remain high for longer than initially thought,” Aben said.

“In any case, the markets have drastically adjusted their expectations for a rate cut. A few weeks ago they were still anticipating a first intervention in June, but that ‘priced-in probability’ has now fallen to about a third,” he added.

Investors will also focus on whether the US central bank will stick to its 2 percent inflation target, according to market watchers.

CBIZ Investment Advisory Services said Fed policymakers will “fall through the cracks” if they stick to this target.

“If there is any relaxation in the 2 percent inflation target, it will open the door to at least one cut by the end of the year,” CBIZ Investment Advisory Services said.

On a macroeconomic level, there were no publications on the agenda in the US on Monday.

The ten-year interest rate was 0.9 percent lower on Monday at 4.629 percent, while the two-year interest rate fell 0.4 percent to 4.981 percent.

June crude oil futures closed $1.22, or 1.5 percent, lower at $82.63 on the New York Mercantile Exchange on Monday.

Four macroeconomic publications are on the agenda in the US on Tuesday. The labor costs and Case Shiller house price index will be released before the market opens, followed by the Chicago purchasing managers index and consumer confidence later in the day.

Company news

Abrupt swings in the so-called ‘Magnificent Seven’ stocks caused market volatility during the second half of the trading day.

Apple rose about 2.7 percent, Amazon.com gained 0.4 percent and Alphabet was down about 3.7 percent. Meta Platforms fell about 3.2 percent, Microsoft lost 1.4 percent and Nvidia was down about 1.0 percent.

Alphabet, Google’s parent company, rose 10 percent on Friday to close with a market capitalization of $2.13 trillion, the first time it closed with a valuation above $2 trillion. Alphabet became only the fourth American company in history to reach the milestone. Earnings were boosted by better-than-expected earnings and a well-received new capital allocation plan, including the company’s first dividend.

Tesla rose more than 15.0 percent after CEO Elon Musk made a surprise visit to China this weekend, where he urged allowing new driver assistance technology for Chinese Tesla owners. Chinese officials told Tesla that Beijing has tentatively approved the company’s plan to launch its “Full Self-Driving,” or FSD, software feature in the country.

AMC fell approximately 11.5 percent on Monday, after the cinema chain published preliminary figures for the first quarter on Friday.

Shares of Domino’s Pizza rose about 5.0 percent. The world’s largest pizza chain reported better-than-expected quarterly results, boosted by intensified promotions and marketing.

The Federal Deposit Insurance Corp. said Fulton Financial’s subsidiary Fulton Bank would take over the deposits of struggling lender Republic First Bancorp, which operated 32 bank branches in Pennsylvania, New Jersey and New York under the name Republic Bank. Fulton, which rose about 7.5 percent, bought Republic First Bancorp through an FDIC auction after state bank regulators in Pennsylvania seized the troubled regional bank. Republic First Bancorp is the first U.S. bank failure this year.

S&P 500 index 5,116.17 (+0.3%)

Dow Jones index 38,386.09 (+0.4%)

Nasdaq Composite 15,983.08 (+0.4%)

ASIA

The Asian stock markets were mostly higher on Tuesday. Chinese purchasing data showed a slowdown in growth in April for both the manufacturing and services sectors.

Nikkei 225 38,326.55 (+1.0%)

Shanghai Composite 3,109.26 (-0.1%)

Hang Seng 17,782.30 (+0.2%)

CURRENCIES

The euro/dollar was trading at 1.0706 on Tuesday morning. When the American stock exchanges closed on Monday, the currency pair was still at 1.0718 and when the European stock exchanges closed there was still a position of 1.0718 on the boards.

USD/JPY Yen 156.78

EUR/USD Euro 1.0706

EUR/JPY Yen 167.86

MACRO AGENDA:

06:30 Producer prices – March (NL)

07:30 Economic growth – First quarter vlpg (Fra)

08:00 Retail Sales – March (Dld)

08:45 Inflation – April vlpg (Fra)

09:55 Unemployment – April (Dld)

10:00 Economic growth – First quarter vlpg (Dld)

11:00 Economic growth – First quarter vlpg (eur)

11:00 Inflation – April vlpg (eur)

2:30 PM Labor Costs – First Quarter (US)

15:00 Case Shiller house prices – February (US)

15:45 Purchasing Managers Index Chicago – April (US)

4:00 PM Consumer Confidence CB – April (US)

COMPANY NEWS:

00:00 Samsung – First quarter figures (ZKo)

07:00 Adidas – First quarter figures (Dld)

07:00 Covestro – First quarter figures (Dld)

07:00 Volkswagen – First quarter figures (Dld)

07:00 Lufthansa – First quarter figures (Dld)

1:00 PM 3M – First Quarter Numbers (US)

13:00 Coca-Cola – First quarter figures (US)

13:00 Eli Lilly – First quarter figures (US)

13:00 McDonald’s – First quarter figures (US)

1:00 PM RBI (Burger King) – First Quarter Numbers (US)

10:00 PM Amazon – First quarter figures (US)

10:00 PM Super Micro Computer – Third Quarter Figures (US)

Source: ABM Financial News

ABM Financial News is a supplier of stock market news, video and data, both for real-time trading platforms and dealing rooms and for online and offline media publications. The information in this article is not intended as professional investment advice or as a recommendation to make certain investments.