PARIS, April 21 (Reuters) – European markets are expected to cautiously rebound on Tuesday following the previous day’s decline, buoyed by reports that Iran is considering participating in peace talks with the United States in Pakistan.
Confidence in artificial intelligence (AI), numerous corporate earnings reports, and Kevin Warsh’s confirmation hearing in the U.S. Senate, President Donald Trump’s nominee to head the Federal Reserve, could also boost risk appetite.
According to preliminary indications, the Paris CAC 40 is expected to open with a gain of 0.35%. The DAX in Frankfurt could advance by 0.51%, while the FTSE 100 in London is likely to rise by 0.24%. The EuroStoxx 50 index is expected to increase by 0.51% and the Stoxx 600 by 0.44%.
On the 53rd day of the Middle East conflict, despite the fragile temporary ceasefire between the U.S. and Iran, the prospect of Iranian-American negotiations seems to be enough for investors to make new bets. A senior Iranian representative indicated on Monday that Tehran is considering whether to send a delegation to Pakistan for new negotiations with Washington, citing the U.S. decision to block Iranian ports as a major obstacle.
A source in Pakistan, the mediator in the negotiations, also mentioned that the current truce will end on Thursday at 00:00 GMT instead of Wednesday, as originally planned.
“Our base scenario remains the resolution of the conflict. (Donald) Trump remains focused on the November midterm elections,” noted Paul Chew, head of research at Phillip Securities.
In financial markets, this translates into a stable dollar, a decline in gold, and a drop in oil prices.
In addition to geopolitics, investors are keeping an eye on today’s corporate earnings season results (Thales, Vivendi, OPmobility, ASMI, Moncler) and macroeconomic indicators (U.S. retail sales, ZEW sentiment in Germany) ahead of the upcoming monetary policy meetings of the Federal Reserve and the European Central Bank next week.
AT WALL STREET
The New York Stock Exchange closed lower on Monday, with investors reducing their exposure after the spectacular rally the previous week, amid rising tensions between the U.S. and Iran as the two-week ceasefire nears its end.
The Dow Jones index fell by 0.01%, or 4.87 points, to 49,442.56 points. The broader Standard & Poor’s 500 lost 16.92 points, or 0.24%, to 7,109.14 points. The Nasdaq Composite dropped by 64.09 points, or 0.26%, to 24,404.393 points.
IN ASIA
At the Tokyo Stock Exchange, the Nikkei index rose by 1.17% to 59,511 points, driven by growth in the technology sector and optimism about a Middle East agreement. The broader Topix added 0.02% to 3,778 points.
The MSCI index of Asia-Pacific shares excluding Japan gained 0.90%.
In China, the Shanghai SSE Composite fell by 0.24% and the CSI 300 retreated by 0.33%, as investors closely monitor U.S.-Iran negotiations in anticipation of signs that could ease concerns about a global energy supply shock.
KEY STOCKS TO WATCH IN EUROPE:
EXCHANGE/RATES
The dollar is stable (+0.02%) against a basket of reference currencies, with investors ready to buy riskier currencies and hoping that a U.S.-Iran agreement would revive shipping in the Gulf.
The euro fell by 0.05% to 1.1780 dollars, while the British pound traded at 1.3523 dollars (-0.08%).
The yield on U.S. ten-year Treasury bonds remained flat at 4.24%, after a six-point decline on Monday.
OIL
Oil prices declined on Tuesday, erasing some of the gains from the previous day, due to expectations of continued negotiations between the U.S. and Iran, which could unlock crude supply from the Middle East.
Brent crude fell by 1.26% to 94.23 dollars per barrel, and West Texas Intermediate (WTI) crude declined by 1.14% to 88.59 dollars.
MAJOR ECONOMIC INDICATORS ON THE AGENDA FOR APRIL 21:
COUNTRY GMT INDICATOR PERIOD CONSENSUS PREVIOUS
GB 06:00 Unemployment Rate February 5.2% 5.2%
DE 09:00 Investor Sentiment (ZEW) April -5.0 -0.5
USA 12:30 Retail Sales March +1.4% +0.6%
- year-on-year n.a. +3.71%
(By Claude Chendjou; Editing by Augustin Turpin)
by Claude Chendjou
