Photo of traders at the Frankfurt Stock Exchange
PARIS (Reuters) – European stocks ended on a hesitant note on Friday, after a week rich in data and before a decisive monetary policy decision by the European Central Bank (ECB).
In Paris, the CAC 40 gained 0.62% to 7,240.77 points, while the German Dax rose 0.14%. The British Footsie gained 0.49%.
The EuroStoxx 50 index ended the session with an increase of 0.38%, ending seven consecutive sessions in the red, compared to a gain of 0.2% for the FTSEurofirst 300 and 0.22% for the Stoxx 600.
Over the week, the CAC 40 lost 0.72% and the Stoxx 600 0.76%.
US data released this week again showed activity resilient to rate hikes, as inflation slows and tensions in labor markets begin to ease.
The ideal scenario of a soft landing therefore seems to be confirmed, and the inflation data, expected on Wednesday, could encourage this outlook.
These data will be all the more important as it will be the last publication of inflation before the Federal Reserve’s decision on Wednesday, September 20.
In the euro zone, on the other hand, activity and sentiment continue to slump, as shown by the final PMI indicators for the month of August, while inflation remains above the target for the ECB and that the rise in oil prices coupled with the weakening of the euro could revive inflationary fears.
The ECB will have to decide on Thursday as dissensions between the members of its governing council increase, and choose to raise its rates or pause its monetary tightening, with monetary markets favoring the second option.
“Two factors favor a pause: several usually restrictive officials will not be eligible to vote next week under the Bank’s rotating voting system. Second, the only possible compromise seems to be a pause coupled with a restrictive message, which would avoid an immediate increase”, estimates Felix Feather, European economic analyst at abrdn.
VALUES
Computacenter jumped 15.31%, topping the Stoxx 600, after the IT services provider said its half-year adjusted pretax profit rose 8.8%.
Barclays initiated coverage of Swedish engineering group Alfa Laval, recommending “overweight”, and Finnish group Wartsila, recommending “underweight”, citing cyclical and circular support factors for the former, and erroneous market perceptions for the second. Wartsila lost 5.09%, among the worst performances on the Stoxx 600, while Alfa Laval lost 0.54%.
AT WALL STREET
Wall Street advances at the close in Europe, supported by technology stocks which advance as investors position themselves ahead of the release of inflation data on Wednesday.
At the time of closing in Europe, trading on the New York Stock Exchange indicated an increase of 0.28% for the Dow Jones, against 0.37% for the Standard & Poor’s 500 and 0.57% for the Nasdaq. Composite.
RATE
Risk aversion benefits US yields, which are declining.
The ten-year Treasury yield decreased by 2.8 bps to 4.2344%, while the two-year rate was stable at 4.9485%.
The German ten-year yield fell 2.1 bps to 2.597%, while that of the two-year rate fell 2 bps to 3.067%.
CHANGES
The diverging economic trajectories between the euro zone and the United States are widening the gap between the euro and the dollar, with the single currency heading for its eighth consecutive weekly decline against the greenback.
The dollar fell -0.1% against a basket of benchmark currencies but is still expected to register its eighth weekly rise, the longest streak since 2014.
The euro climbed 0.07% to $1.0706, and the pound sterling was stable at $1.2471.
OIL
Crude is not reacting to the deterioration of the economic outlook in Europe and China but is progressing, supported by the decision of Saudi Arabia and Russia to adjust their production according to market conditions.
Brent rose 0.9% to 90.73 dollars a barrel, US light crude (West Texas Intermediate, WTI) rising 0.87% to 87.63 dollars.
(Written by Corentin Chappron)