A sign of the London Stock Exchange, Great Britain
by Claude Chendjou
PARIS (Reuters) – European stock markets ended with weak variations on Thursday and Wall Street moved on a cautious note at mid-session, as investors tried to digest the solid economic data published in the United States which warded off the specter of a recession. but at the same time fuel the prospect of prolonged monetary tightening.
In Paris, the CAC 40 ended with a gain of 0.36%, at 7,312.73 points. The British Footsie fell 0.38%, mainly penalized by the real estate sector. The German Dax lost 0.01%.
The EuroStoxx 50 index rose 0.23%, the FTSEurofirst 300 0.11% and the Stoxx 600 0.13%.
In the United States, growth in gross domestic product (GDP) in the first quarter was revised upwards on Thursday, by 2.0% at an annualized rate compared to the previous three months, which is reassuring at the economic level, but offers the US Federal Reserve (Fed) new arguments for a continued rise in interest rates.
Sign of investors’ hesitation, the equity markets in Europe and the United States alternated during the session one foot in the green and another in the red, but always with tiny differences, while the VIX index volatility rose slightly above 13 points.
Inflation data due Friday in the United States and the euro zone should provide markets with new elements on the evolution of the path of interest rates as consumer prices in Germany reaccelerated in June, at 6.8% over one year.
VALUES IN EUROPE
The distribution compartment (+1.75%), driven by the results of H&M (+18.18%), recorded the best progress in the Stoxx 600.
Real estate (-1.16%), weighed down by expectations of an increase in the cost of credit, posted the largest drop in the pan-European index.
In Paris, Renault jumped 4.97% thanks to the increase in its forecasts for this year, while Engie (+4.13%) took advantage of the announcement of an agreement in Belgium on the extension of two nuclear reactors.
On the SBF 120, the prospect of massive dilution for the current shareholders of Orpea and Casino, within the framework of restructuring plans, caused the two stocks to plunge by 12.23% and 32.27% respectively.
AT WALL STREET
At the time of the close in Europe, the Dow Jones advanced by 0.67%, the Standard & Poor’s 500 by 0.36% and the Nasdaq by 0.11%.
Big banks Bank of America, Wells Fargo, JPMorgan Chase, Goldman Sachs and Morgan Stanley advance 1.2% to 3.2% after the results of the Fed’s annual “stress test” show that these institutions have enough capital to cope with a serious economic crisis.
Six of the 11 major sectors of the S&P-500 are in the green, the best performance being for finance (+1.31%).
CHANGES
The dollar hit a two-week high against a basket of benchmark currencies after fresh data from the US and Fed Chairman Jerome Powell’s statement that inflation won’t return until 2025 towards the central bank’s 2% target. The Atlanta Fed’s Raphael Bostic said the bank will have to keep raising rates if inflation expectations start moving “in a difficult way.”
The euro is displayed at 1.088 dollars (-0.28%) and the pound sterling at 1.2616 dollars (-0.19%).
The Swedish krona is trading at 11.815 per euro after the Swedish central bank’s decision to raise its key rate to 3.75%.
RATE
Bond yields are tightening under the effect of economic data which confirms the “hawkish” tone displayed this week by several central bankers. Money market traders are pricing in an 83% chance of a 25 basis point Fed rate hike next month after the pause decided this month.
Yields on ten-year and two-year US Treasuries take about 12 and 14 basis points, respectively, to 3.8461% and 4.8717%
Those of the Bund at ten years and two years ended with respective gains of 9.5 points and 8 points, at 2.411% and 3.255%.
OIL
Dollar appreciation and aggressive interest rate rhetoric weigh on oil prices: Brent fell 0.43% to $73.71 a barrel and US light crude (West Texas Intermediate, WTI) 0.35 % at $69.32.
TO BE FOLLOWED ON FRIDAY:
(Written by Claude Chendjou, edited by Jean-Stéphane Brosse)