Europe ends down after announcements from the ECB and the BoE – 02/03/2022 at 18:24


EUROPEAN STOCK MARKETS END SHARPLY LOWER

by Claude Chendjou

PARIS (Reuters) – European stock markets ended sharply lower on Thursday and Wall Street was also moving into negative territory at midday, the session on the equity markets being weighed down by forecasts deemed disappointing by Meta Platforms, the parent company of Facebook, and the decisions of the European Central Bank (ECB) and the Bank of England (BoE) to fight against inflation.

In Paris, the CAC 40 ended down 1.54% at 7,005.63 points. The British Footsie fell by 0.71% and the German Dax by 1.57%.

The EuroStoxx 50 index fell 1.92%, while the FTSEurofirst 300 and the Stoxx 600 each fell 1.76%.

The President of the European Central Bank, Christine Lagarde, acknowledged Thursday that inflation in the euro zone was stronger than expected and that the risks were on the upside. She also refrained from saying that an interest rate hike this year was unlikely, contrary to her previous statements.

The Bank of England, for its part, raised its main interest rate again, to 0.5%, and four of the nine members of its Monetary Policy Committee (MPC) voted for an even more marked increase. , at 0.75%, in order to fight against inflation which could exceed 7% in the spring according to its new forecasts.

In the United States, when the monthly employment report will be published on Friday, the market fears up to seven interest rate hikes by the American Federal Reserve this year.

Before the statement from the ECB and the BoE, the equity markets were already shaken by the forecasts of the owner of Facebook, which weigh on the entire technological compartment.

“The results of Meta have a big impact, it’s like a real earthquake,” observes Mikael Jacoby, head of continental Europe trading at Oddo Securities.

A sign of nervousness in the markets, the volatility index in Europe ended up 7.4%, while its American equivalent advanced 7.6%.

AT WALL STREET

At the time of the close in Europe, the Dow Jones fell 0.7%, the Standard & Poor’s 500 1.4% and the Nasdaq 2.2%

Facebook’s parent company, which wiped out more than $200 billion in market capitalization due to a quarterly revenue forecast that fell short of expectations, fell nearly 25%.

It drags in its fall the semiconductor manufacturer Qualcomm (-4.8%) which nevertheless reported record sales in the last three months of 2021 and a better than expected objective for the quarter. In progress.

Twitter for its part fell by 5%, Snap by 20% and Pinterest by 8%, while the technology compartment dropped 1.7%.

All sectors of the S&P-500 are in the red.

VALUES IN EUROPE

In Europe, the high-tech sector, down 3.5%, posted one of the biggest declines in the Stoxx 600, weighed down by both Facebook and the prospect of monetary tightening.

ASML fell 4.1%, SAP 2.6% and STMicroelectronics 4%. Infineon lost 4.9%, its forecasts being considered cautious.

Dassault Systèmes lost 3.7% after warning that its operating margin would decline this year.

The digital services group Atos, buoyed on Wednesday by information from Reuters that Thales (-0.3%) was considering buying its BDS cybersecurity division, fell 7.4% on Thursday after declaring that this division did not was “not for sale”.

Excluding technology, the results of Roche (-2.4%), ING (-2.1%) or even ABB (-2.4%) were poorly received, while those of Publicis (+0.5%) , Compass (+4%) and Shell (+1.4%) were praised.

THE INDICATORS OF THE DAY

In Europe, growth in private sector activity in the euro zone slowed further in January, to 52.3 from 53.3 in December, as the services sector suffered from the impact of the Omicron wave of the epidemic. COVID-19 on demand, IHS Markit survey shows.

In the United States, growth in services activity also slowed last month, to an 11-month low, due to the resurgence of the COVID-19 epidemic, the Institute’s survey shows. for Supply Management (ISM).

Unemployment claims in the United States last week fell more than expected, to 238,000 from 261,000 the previous week.

CHANGES

On the foreign exchange market, the dollar fell by 0.6% against a basket of reference currencies, while the euro appreciated by 1.2% to 1.1443 dollars after statements deemed more restrictive by Christine Lagarde , the President of the ECB.

Eurozone money markets are now pricing 80% on a 10 basis point rate hike in June and almost 100% on a 40 basis point rise in the cost of credit by the end of the year, against a 90% probability of a rise of 30 points before his press conference.

The pound sterling gained 0.23% to 1.3604 against the greenback after the announcements of the BoE.

RATE

On the bond market, the yield of ten-year Treasuries rose seven basis points to 1.8378% and that of two years, which is more sensitive to changes in rates, took 5.2 points to 1.2079%.

In Europe, yields ended up sharply in anticipation of a rate hike: that of the ten-year German Bund took 11 basis points to 0.148%, after touching 0.15% in session, its level the highest since the start of 2019. Its French equivalent of the same maturity gained 14 points at 0.585%.

OIL

Oil prices are rising after the decision of OPEC and its allies to stick to their production increase quotas.

The barrel of Brent took 0.4% to 89.8 dollars and American light crude 0.5% to 88.7 dollars.

TO BE FOLLOWED ON FRIDAY:

Publication at 1:30 p.m. GMT of job creations in the United States, the unemployment rate and the average hourly wage.

(Some data may show a slight shift)

(Report Claude Chendjou, edited by Sophie Louet)



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