Europe ends pessimistic after a busy week – 09/22/2023 at 7:43 p.m.


Photo of the Euronext stock exchange in the La Défense business district in Paris

PARIS (Reuters) – European stock markets ended hesitantly on Friday, at the end of a week full of monetary policy events, which called into question the economic outlook.

In Paris, the CAC 40 dropped 0.4% to 7,184.82 points, while the German Dax lost 0.09%. The British Footsie closed flat.

The EuroStoxx 50 index ended the session down 0.13%, compared to 0.32% for the FTSEurofirst 300 and 0.31% for the Stoxx 600.

Markets are digesting a busy week of monetary policy decisions, which seem to indicate that the rate peak is near but that future cuts will have to be patient.

The meeting of the American Federal Reserve (Fed) on Wednesday was the main event of the week: if the American central bank, as expected, took a break from its monetary tightening, its president Jerome Powell warned that key rates would remain at a higher level for longer.

A rate cut seems all the more distant as the American economy displays unfailing resistance, which will limit the pressure put on the Fed to ease monetary conditions: the economic projections of the American central bank support the soft landing scenario.

“The message that macroeconomic data sends (in the United States) remains that of an improvement in the situation, which contrasts sharply with what it was a few months ago. The enigma that investors must decipher is whether this is good or bad news for risky assets,” notes Florian Ielpo, head of research at Lombard Odier AM.

The Bank of England and the Swiss central bank also surprised markets this week by leaving their rates unchanged, but in restrictive territory.

The contraction in PMI activity indicators on Friday, indicating that the transmission of higher rates to the European economy continues, also put pressure on stocks.

VALUES

Ubisoft ended up 4.47%, among the best performances of the Stoxx 600, after the favorable opinion of the British competition authorities on the restructured acquisition of Activision Blizzard by Microsoft, which would allow the French video games specialist to reclaim streaming rights from Activision.

Gucci’s new creative director revealed his collection during a fashion show on Friday, which supported Kering’s share price, which gained 1.51%.

Solutions 30 reported on Thursday a widening of its net loss in the first half to 14.4 million euros, which weighed on the stock, falling 16.79%, at the bottom of the SBF 120.

Dutch banks fell after Dutch parliamentarians supported a plan to raise taxes on banks to cover an increase in the minimum wage and greater childcare support in 2024. ING lost 6.35 %, ABN AMRO 4.47% and Van Lanschot Kempen 0.76%. The sector index of European banks fell by 1.14%.

A WALL STREET

Wall Street advances to closing time in Europe after three consecutive sessions of decline, the markets positioning themselves before numerous comments from members of the Fed’s board of governors.

At closing time in Europe, trading on the New York Stock Exchange indicated an increase of 0.12% for the Dow Jones, compared to 0.44% for the Standard & Poor’s 500 and 0.96% for the Nasdaq. Composite.

RATE

Yields are eroding after jumping in the previous two sessions following the Fed announcements.

The ten-year Treasury yield fell 4.4 basis points to 4.4357%, while the two-year rate lost 3.6 bps to 5.1119%.

The German ten-year yield closed stable at 2.74%, while the two-year yield fell 1 bp to 3.254%.

CHANGES

The dollar rose moderately, near a six-month high, ahead of comments from several members of the Fed’s board of governors, including Minneapolis Fed President Neel Kashkari and board governor Lisa Cook.

The dollar advanced 0.07% against a basket of benchmark currencies, hitting a six-month high during the session, while the euro remained stable at $1.0661.

The pound sterling fell 0.27% to $1.2261.

OIL

Crude is increasing, with markets worried about the Russian decision to ban exports of diesel and gasoil, in order to control prices on the domestic market.

Brent nibbles 0.23% to 93.51 dollars per barrel, American light crude (West Texas Intermediate, WTI) rising 0.41% to 90 dollars.

TO BE CONTINUED ON MONDAY:

(Written by Corentin Chappron)



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