(Reuters) – European stock markets ended higher on Friday and posted an increase of more than 1% for the week as a whole, while Wall Street remains well oriented, investors continuing to bet on an ebb of inflationary pressures and a slowdown of rising interest rates.
In Paris, the CAC 40 gained 0.14% (9.19 points) to 6,553.86 points after rising in session to 6,587.84, its highest level since June 6. In London, the FTSE 100 advanced 0.47% and in Frankfurt, the Dax gained 0.74%.
The EuroStoxx 50 index ended up 0.53%, the FTSEurofirst 300 0.22% and the Stoxx 600 0.16%.
At the time of the closing in Europe, Wall Street amplified its progression, the Dow Jones winning 0.58%, the Standard & Poor’s 500 0.85% and the Nasdaq Composite 1.2%.
US equities are benefiting in particular from the first results of the University of Michigan’s monthly survey on household morale: its confidence index, at 55.1, confirms the rebound that began last month after its historic low in June.
The detail of the survey shows in particular an improvement in consumer expectations for inflation, a logical development after the below-expected figures for consumer and producer prices published in recent days.
Import price statistics confirmed this trend with a fall of 1.4% in July, which brings their rise over one year to 8.8% after +10.7% in June.
These signs of moderating inflation favor a downward revision of the Federal Reserve’s rate hike expectations for the time being: according to the CBOE’s FedWatch barometer, the estimated probability of a rate hike of 75 basis points in September, which exceeded 50% at the start of the week, fell to 42.5%.
The S&P-500 and the Nasdaq are thus heading for a fourth positive weekly performance in a row. The Stoxx 600 took 1.18% over the week and the CAC 40 1.26%.
VALUES
The strongest sectoral progress of the day in Europe is for the compartment of transport and leisure, whose Stoxx index took 3.87% thanks to the jump of 14.41% of the Irish specialist betting and games Flutter (owner of Paddy Power and Betfair among others) after strong growth results.
The pharmaceutical groups Sanofi (+0.84%), GlaxoSmithKline (+3.57%) and Haleon (+2.18%) have regained ground after their fall in the last two days, several analysts relativizing the financial risks linked to the file of Zantac. Sanofi nevertheless lost 12.5% over the week, its worst weekly performance since March 2020.
TF1 fell 3.24% after Barclays lowered its recommendation to “underweight” versus “overweight”; the bank explains that it no longer believes in the merger with M6 (+0.16%) and considers TF1 more exposed than its major competitors to the risk of recession.
CHANGES
The dollar appreciated against the other major currencies (+0.68%) but remained down over the week, a consequence of the evolution of forecasts on the next initiative of the Fed.
The euro fell to 1.0255 dollars (-0.60%) but recovered nearly 0.7% in five sessions.
The pound sterling suffered from the announcement of a contraction in British gross domestic product (GDP) in June and dropped 0.69% against the dollar.
RATE
Eurozone yields ended the day up, at 0.987% for the German ten-year and 1.546% for its French equivalent, still driven by the scenario of a further half-point rise in the Bank’s rates. European Central Bank (ECB) next month.
On the US bond market, it’s time for yields to ease again, after Thursday’s rise prompted by statements from Fed officials: the ten-year fell three basis points to 2.8566%, the two years by just over two points to 3.2547%.
OIL
The oil market is widening its losses between the rise of the dollar and questions about the evolution of global demand, but it remains on track to record a positive weekly performance after the fall suffered last week.
Brent fell 1.57% to 98.04 dollars a barrel and US light crude (West Texas Intermediate, WTI) 2.07% to 92.39 dollars.
(Written by Marc Angrand, edited by Jean-Stéphane Brosse)