by Laetitia Volga
PARIS (Reuters) – European stocks ended higher on Friday as monthly U.S. jobs data appeased investors on inflation and U.S. monetary policy tightening, which is helping a weaker dollar and bond yields.
In Paris, the CAC 40 gained 2.21% to 6,167.51 points. Britain’s Footsie gained 1.87% and Germany’s Dax advanced 3.33%.
The EuroStoxx 50 index ended up 2.58%, the FTSEurofirst 300 1.94% and the Stoxx 600 2.01%.
Over the whole week, the latter lost 2.38% and the CAC 40 1.70%, their third consecutive week of decline.
At the time of the close in Europe, Wall Street was also in the green: the Dow Jones took 1.07%, the Standard & Poor’s 500 1.19% and the Nasdaq Composite 1.16%.
In view of the long weekend that is looming in the United States for “Labor Day” and the difficult week that the markets have gone through with fears about the Chinese economy, inflation and the rise in interest rates interest, the publication of the US employment report offers respite to equities.
The pace of job creation slowed less than expected in August, to 315,000, but the jobless rate rose to 3.7% and wage growth moderated, the Labor Department said. which makes some observers hope that the Fed is reviewing the extent of its monetary tightening
“With wage inflation being weaker than expected, this suggests a slowing in the pace of rate hikes after the expected 75 basis point rise in September,” said James Knightley, chief economist at ING.
According to the CME Group’s FedWatch barometer, the markets continue to estimate a rise of three quarter points on September 21, but this probability has been revised down to 64%, against 75% the day before.
VALUES
All European sectors ended the day on the rise, with the most significant increases coming from automotive (+3.77%), financial services (+3.44%) and construction (+3, 42%).
In corporate news, Credit Suisse gained 6.13% following reports that the bank plans to cut around 5,000 jobs to cut costs.
RATE
The yield on ten-year US Treasuries fell three basis points to 3.2385% after the release of the Labor Department report.
Its benchmark equivalents in Europe followed suit: that of the ten-year German Bund fell more than four basis points to 1.518% and the yield of the ten-year OAT ended at 2.145%.
They both hit a more than two-month high on Thursday, with money markets pricing the odds of a 75 basis point ECB rate hike next Thursday at more than 80%.
For Andreas Jobst, senior economist at Allianz, the central bank will have to cut its rates at the end of the first quarter of 2023, a recession in the fourth quarter of 2022 being “inevitable”.
CHANGES
The dollar widened its losses after the employment figures. The index measuring it against a basket of currencies fell by 0.57%.
The euro thus rose to 1.0021 dollars, up 0.77%.
OIL
The oil market pared its gains slightly after G7 countries agreed to cap prices on imported Russian oil to limit Moscow’s revenue.
But prices remain largely up pending Monday’s OPEC+ meeting on its production strategy.
Brent gained 2.06% to 94.26 dollars a barrel and US light crude (West Texas Intermediate, WTI) 2.14% to 88.46 dollars.
(Laetitia Volga, edited by Tangi Salaün)