PARIS, Aug 8 (Reuters) – The main European stock markets rose on Monday at the start of the session, erasing Friday’s losses following the monthly employment figures in the United States, in anticipation of US inflation which should fuel discussions on the pace of monetary tightening by the Federal Reserve.
In Paris, the CAC 40 gained 0.73% to 6,519.30 points around 08:00 GMT GMT. In London, the FTSE 100 takes 0.15% and in Frankfurt, the Dax advances by 0.63%. The EuroStoxx 50 index is up 0.68%, the FTSEurofirst 300 0.34% and the Stoxx 600 0.54%. European markets closed lower on Friday in reaction to the unexpected announcement of a strong acceleration in July of job creations in the United States, accompanied by a decline in the unemployment rate to 3.5%, which came to appease the fears of recession but also reinforce the prospect that the Fed could continue the rapid rise in its interest rates.
Debates over the extent of monetary tightening by the US central bank are set to intensify on Wednesday with the publication of the consumer price index (CPI) in the United States in July, whose rise is expected to slow to 8.7. % over one year but accelerate to 6.1% excluding energy and food prices (“core CPI”), according to the Reuters consensus. “It will likely take a reading below 8.4% for the CPI for the probability of a 50bps rate hike in September to become the default setting,” although that “seems unlikely,” wrote Chris Weston research manager at Pepperstone in a note. Traders currently estimate a 66.5% chance of a 75 basis point rate hike at the Fed meeting in September, according to CME’s FedWatch Barometer.
As for values, Veolia gains 2.17% after the announcement of an agreement for the sale of Suez’s waste activities in the United Kingdom to Macquarie for 2.4 billion euros, an operation which should enable it to respond to the main concerns of the British competition authority in the context of the acquisition of Suez. The luxury group LVMH (+1.2%) is also among the strongest increases in the CAC 40, supported by a recommendation from Credit Suisse to “outperform”. Down, Siemens Energy dropped 4.02% after saying it expected a larger than expected annual net loss, due to a charge of around 200 million euros related to the restructuring of its activities in Russia.
(Written by Laetitia Volga, Editing by Kate Entringer)