Photo of the Euronext stock exchange in the La Défense business district in Paris
by Claude Chendjou
PARIS (Reuters) – European stock markets ended a session with little variation on Tuesday without much conviction, while Wall Street was in the red late in the morning in New York in a context of caution on the eve of decisions by the Federal Reserve American (Fed).
In Paris, the CAC 40 gained 0.08% to 7,282.12 points. The British Footsie gained 0.09%. The German Dax fell sharply, by 0.40%, penalized in particular by Deutsche Post (-6.47%) after the lowering of its price target by Barclays.
The EuroStoxx 50 index fell by 0.07%, the FTSEurofirst 300 by 0.13% and the Stoxx 600 by 0.04%.
Market sentiment was affected by uncertainties surrounding the evolution of monetary policy as the Fed is due to make these decisions on Wednesday following two days of FOMC debate. Decisions from the Bank of England (BoE), the Swiss National Bank (SNB), Norges Bank (Norway) and the Bank of Japan (BoJ) are also expected between Thursday and Friday.
Investors are looking to determine whether current interest rates in the Eurozone, the United Kingdom and the United States are now at their peak level or very close to the end of a rising cycle that began just over of one to curb record inflation.
In the euro zone, a Reuters survey of economists shows that the European Central Bank (ECB) is done with rate hikes and will opt for the status quo at least until July 2024.
In the United States, where the economy is showing unexpected strength to the point that the OECD on Tuesday raised its forecast for global gross domestic product (GDP) for 2023 to 3%, the Fed’s projections in this area will be particularly closely monitored.
VALUES
Company results and forecasts animated discussions in Europe, with notably SMCP which plunged by 29.072% and Kingfisher by 12.224% in reaction to the lowering of their annual outlook.
TUI (+3.30%), Ocado Group (+1.55%) and Marks & Spencer (+2.69%), which conversely raised or confirmed their annual forecasts, ended in the green.
On the Parisian CAC 40, Société Générale, which plunged more than 12% on Monday following the presentation of its 2026 strategic plan, lost another 0.62%, HSBC having lowered its recommendation to “keep” on the bank .
A WALL STREET
At the close in Europe, the Dow Jones fell by 0.75%, the Standard & Poor’s 500 by 0.65% and the Nasdaq by 0.8%.
Large capitalizations like Amazon, Nvidia and Microsoft fell by 2.83%, 1.73% and 0.84% respectively against a backdrop of tensions in the bond market.
Walt Disney lost 3.55%, the group having announced that it had almost doubled its investment spending for its parks, which will reach around 60 billion dollars over the next ten years.
American grocery delivery platform Instacart, a company backed by Japanese conglomerate Softbank, is making its stock market debut and could be valued at $13 billion.
TODAY’S INDICATORS
Inflation in the euro zone came out in August over one year slightly below the first estimate, at 5.2%, show final data published by Eurostat.
CHANGES
The dollar is falling against a basket of reference currencies while awaiting decisions from the Fed. The greenback, however, remains close to the six-month peak reached last Thursday at 105.43 points.
The euro is practically unchanged at 1.0682% (-0.07%) after rising to 1.0718 dollars in the morning in reaction to information from Reuters according to which the ECB could begin a debate next month on excess liquidity in the banking system.
RATE
Bond yields in the euro zone have moved closer to a peak of more than 12 years, driven by comments deemed restrictive by ECB officials, such as François Villeroy de Galhau, who believes that the institution will also have to maintain long as necessary its deposit rate at 4.0%.
The yield on the ten-year German Bund ended with a gain of more than two basis points, at 2.736%, just like that of the two-year which stood at 3.284%.
In the United States, the yields on ten-year and two-year Treasuries are respectively at 4.3386% and 5.088%, also up by around two basis points.
OIL
The drop in American production combined with cuts in extraction from OPEC+ countries are pulling down oil prices, which are heading towards a fourth session of increases in a row: Brent rose 0.93% to 95.31 dollars per barrel. and American light crude (West Texas Intermediate, WTI) 1.24% to $92.61.
TO BE CONTINUED ON WEDNESDAY:
Fed monetary policy statement at 6:00 p.m. GMT, followed by a press conference by its chairman, Jerome Powell, at 6:30 p.m. GMT
(Written by Claude Chendjou, edited by Zhifan Liu)