Traders in London, Great Britain
by Diana Mandia
(Reuters) – European stock markets ended sharply higher on Tuesday, supported by accommodating comments from Federal Reserve (Fed) officials despite tensions linked to the conflict in the Middle East.
In Paris, the CAC 40 ended up 2.01% at 7,162.43 points. The British Footsie gained 1.82% and the German Dax gained 1.95%.
The EuroStoxx 50 index increased by 2.25%, the FTSEurofirst 300 by 1.94% and the Stoxx 600 by 1.96%, its best session of 2023.
Comments from US Central Bank officials relieved investors and contributed to bond easing in the United States, with Dallas Fed President Lorie Logan and Fed Vice Chairman Philip Jefferson pleading all two for a cautious approach to the cost of money in a context of a sharp rise in government bond yields.
On Tuesday, Atlanta Federal Reserve President Raphael Bostic added to the optimism, saying the U.S. central bank did not need to raise interest rates further.
The rush to safe-haven assets such as the dollar, gold and sovereign bonds also calmed somewhat on Tuesday, while oil prices fell amid geopolitical tensions three days later. of the attack launched by Hamas on Israeli territory.
A Bloomberg report on possible new economic support measures in China also fueled optimism.
However, caution remains in order ahead of a series of key indicators this week, including German and US inflation figures, and while the latest minutes of the monetary policy meetings of the Fed on Wednesday and the ECB on Thursday are also expected provide elements to evaluate the trajectory of rates.
VALUES
In terms of values, the French video game publisher Ubisoft dropped 5% after postponing the launch of its new title XDefiant to an indefinite date.
Carrefour lost around 1.2% after JP Morgan lowered the French retailer’s third-quarter revenue forecast by 10%.
Alstom, which is recovering slightly after last week’s tumble following the liquidity warning, advanced 4.5%.
Elis gained 4.7% after BWGI (BW Gestão de Investimentos), a Brazilian company, took a stake of around 6% in its capital.
On the Stoxx, all sectors finished higher, with basic resources (2.89%), automotive (2.5%) and travel (3.87%) leading the gains.
A WALL STREET
At closing time in Europe, the Dow Jones rose 0.71%, the Standard & Poor’s 500 1.06% and the Nasdaq Composite 1.24%, supported by the decline in yields on US Treasury bills.
CHANGES
After having progressed on Monday, driven by its status as a safe haven, the dollar fell by 0.36% on Tuesday with the Fed’s accommodating comments regarding a basket of reference currencies, while the euro advanced by 0.47% to $1.0615.
“With Treasury yields having fallen significantly this morning, resulting in a more constructive session for European stocks, it appears that FX traders are more comfortable moving away from the dollar,” he said. said Simon Harvey, analyst at Monex Europe.
RATE
Strong demand for sovereign bonds in the euro zone ran out of steam after a rush on safe haven assets on Monday, against a backdrop of geopolitical tensions.
The German ten-year yield rose almost 2 bps to 2.784% after falling 12.5 bps the day before, while that of the two-year DE2YT=RR rose 4 bps to 3.071%.
American bond markets are falling after comments from Fed officials on rates.
The ten-year Treasury yield dropped 15 basis points to 4.6323%, while the two-year rate US2YT=RR fell 13 basis points to 4.9443%.
OIL
Oil prices, which jumped more than 4% on Monday, eroded on Tuesday, with operators remaining attentive to possible disruptions in supply against the backdrop of the Israeli-Palestinian conflict.
Brent advanced by -0.75% to $87.49 per barrel LCOc1, with American light crude (West Texas Intermediate, WTI) increasing by -0.75% to $85.73 CLc1.
TO BE CONTINUED ON WEDNESDAY:
(Some data may have a slight lag)
(Written by Diana Mandiá)