EUROPEAN STOCK MARKETS END LOWER
by Claude Chendjou
PARIS (Reuters) – European stock markets ended lower on Friday and Wall Street was also trading in the red mid-session, as equity markets were penalized by the Tesla boss’s warning on the economic situation and the statistics of the monthly report on employment in the United States which raise fears of an acceleration of monetary tightening in the face of galloping inflation.
In Paris, the CAC 40 ended down 0.23% at 6,485.3 points. The German Dax for its part lost 0.17%.
The EuroStoxx 50 index fell by 0.3%, the FTSEurofirst 300 by 0.36% and the Stoxx 600 by 0.26%.
The London Stock Exchange remained closed due to celebrations of Queen Elizabeth II’s Platinum Jubilee, while in mainland China and Hong Kong the day was a public holiday, limiting trading volume.
Over the whole week, the CAC 40 lost 0.46% and the Stoxx 600 0.87%.
The report released by the Labor Department on Friday showed that the US economy added more jobs in May than expected (390,000 against 325,000 expected), while the unemployment rate remained stable at 3.6%, which testifies to the robustness of the labor market and could encourage the US Federal Reserve to accelerate the rise in its interest rates.
“(This report) allows the Fed to continue with rate hikes because the labor market is strong. The Fed can worry more about inflationary pressures and less about the labor market,” said Anthony Saglimbene, market strategist at Ameriprise. Financial.
“The market is still concerned about wage inflation. Even with a 0.3% rise, it’s still a very high rate,” he added, referring to the jobs report.
Rate hikes of half a point are expected this month and July in the United States, while in the euro zone, the European Central Bank (ECB) indicated that its deposit rate would return to positive territory d by the end of September.
Money markets in the euro zone on Friday were expecting a 125 basis point increase in ECB rates by the end of the year and a 100 point hike by October.
AT WALL STREET
At the time of the close in Europe, the Dow Jones fell by 1.09%, the Standard & Poor’s 500 by 1.72% and the Nasdaq by 2.64%.
In addition to the fear of a sharp rise in interest rates, Tesla and Apple are weighing on the indices.
Elon Musk, CEO of Tesla, said in an email to company executives on Thursday that he had “a very bad feeling” for the outlook for the economy. The action fell by 8.77%.
Apple, meanwhile, is down 4.18%, with sources reporting to Reuters that the European Union is expected to agree on a draft directive on June 7 that will mandate the adoption of a universal USB-C charger for all. manufacturers of smartphones and tablets.
Sector-wise, consumption (-2.90%) and new technologies (-2.66%) are among the biggest declines, while energy gains 0.93%.
VALUES IN EUROPE
In Europe, defensive compartments such as utilities, real estate and healthcare resisted the downward trend and energy (+0.62%) posted the strongest rise.
TotalEnergies (+0.57%), Veolia (+1.29%) and Sanofi (+0.73%) notably stood out on the Parisian CAC 40.
On the downside, Faurecia, which launched a capital increase of 705 million euros to finance the takeover of the German automotive supplier Hella, dropped 6.70%.
Elsewhere in Europe, Aperam gained 1.82% and Acerinox fell 2.99%, the two steelmakers confirming on Friday that they were discussing the possibility of a merger that could create Europe’s number one stainless steel company.
Leonardo took 1.86% in response to information that the German group Rheinmetall (+4.93%) wants to take a 49% stake in the OTO Melara division of the Italian defense group.
THE INDICATORS OF THE DAY
Eurozone private business activity growth remained solid in May but is increasingly under threat from soaring prices, supply chain strains and uncertainties related to the war in Ukraine , shows the S&P Global survey.
Retail sales in the euro zone fell against all expectations in April, by 1.3%, while industrial production in France fell by 0.1% over the same period.
In the United States, growth in service sector activity slowed in May for the second consecutive month with the ISM index down to 55.9 from 57.1 in April.
CHANGES
The dollar, which is near a ten-year high against other major currencies, rises another 0.29% on expectations of a rate hike in the United States
The euro, down 0.24%, is trading at 1.0719 dollars.
RATE
US bond yields are being driven by the jobs report, allowing the ten-year US Treasury yield to rise to a two-week high at 2.986%.
In Europe, the ten-year German Bund yield took about four basis points to 1.272% after climbing as high as 1.281%, the highest since 2014.
OIL
Oil prices are rising, with some analysts saying OPEC+’s decision to raise monthly production by 648,000 barrels per day (bpd) in July and August won’t be enough to meet demand amid lifting of health restrictions in China.
The barrel of Brent took 2.02% to 119.96 dollars and that of American light crude (West Texas Intermediate, WTI) 2.16% to 119.35 dollars.
(Written by Claude Chendjou, edited by Sophie Louet)