Interior of the Amsterdam Stock Exchange
PARIS (Reuters) – European stock markets ended lower on Monday, under pressure from restrictive comments from members of the governing council of the European Central Bank (ECB), as investors position themselves for higher key rates for longer .
In Paris, the CAC 40 dropped 0.85% to 7,123.88 points, while the German Dax lost 0.98% and the British Footsie 0.78%.
The EuroStoxx 50 index ended the session down 0.95%, compared to 0.62% for the FTSEurofirst 300 and 0.62% for the Stoxx 600.
September was marked by the meeting of numerous central banks, including the Federal Reserve and the ECB, which each warned that rates were nearing their peak, but could be kept there for longer than initially expected.
The ECB does not comment on the future evolution of its rates, but the Fed forecasts a reduction of 50 basis points in its key rate in 2024, compared to the 100 basis point reduction forecast by the central bank in its previous forecasts, published in June.
Investors are therefore focusing on the elements helping to clarify the trajectory of rates: inflation data in the euro zone and the PCE price index, the Fed’s preferred inflation indicator, are expected on Friday and will be essential to market rate expectations.
On Monday, statements from Christine Lagarde, President of the ECB, and Isabelle Schnabel, member of the board of governors of the central bank, helped to revive concerns about rates.
The President of the ECB thus insisted on the need to maintain rates at a restrictive level for a sufficient time, while Isabel Schnabel explained that the euro zone was not finished with inflation.
RATE
Long-term yields have reached record levels over several years, supported by the outlook for long-term restrictive rates.
The ten-year Treasury yield jumped 7.7 bps to 4.5171%, hitting a 16-year high during the session, while the two-year yield lost 1.5 bps to 5.1077%. .
The German ten-year yield closed up 5 bps to 2.786%, its highest since 2011, while that of the two-year rate lost 3 bps to 3.219%.
VALUES
The luxury sector fell after the S&P agency lowered its growth outlook for the Chinese economy. Kering lost 4.54%, LVMH 2.59% and Hermès 3.36%, the three worst performers in the CAC 40. Elsewhere in Europe, Richemont, Moncler and Burberry lost 2.39% and 2.09% respectively. and 4.51%, while the luxury sector index fell by 2.59%.
Ubisoft granted itself 2.55%, with Exane BNP Paribas “outperforming” on the video game publisher.
Klépierre lost 3.03% after RBC lowered its recommendation to “underperform” from “performance in line with the sector”.
Entain fell 13.07%, trailing the Stoxx 600, after it said its online gaming revenues were expected to fall by a “high single-digit percentage” on a pro forma basis due to regulatory and financial issues. slower than expected growth in Australia and Italy.
A WALL STREET
Wall Street is hesitant at closing time in Europe ahead of a question-and-answer session with Minneapolis Fed Governor Neel Kashkari that could help clarify the trajectory of rates.
At closing time in Europe, trading on the New York Stock Exchange indicated a stable Dow Jones, compared to an increase of 0.23% for the Standard & Poor’s 500 and 0.26% for the Nasdaq Composite.
CHANGES
The dollar is advancing to an almost one-year high, supported by rising bond yields.
The dollar rose 0.35% against a basket of reference currencies, while the euro lost 0.61% to 1.0587 dollars. The pound sterling fell 0.2% to $1.2214.
OIL
Crude is falling as markets worry about the impact of higher rates on oil activity and demand in advanced economies.
Brent dropped 0.29% to $93 per barrel, with light American crude (West Texas Intermediate, WTI) falling 0.47% to $89.61.
(Written by Corentin Chappron)