by Claude Chendjou
PARIS (Reuters) – The main European stock markets, except in London, ended Friday with small gains, while on Wall Street the indices were in disarray in a session marked by the “four witches”, the expiration of contracts and options, and doubts about the speed of central bank rate reductions.
In Paris, the CAC 40, which set a historic record Thursday at 7,653.99 points, ended up 0.28% at 7,596.91 points, its closing record. The German Dax finished almost stable (-0.79 points) the day after a session peak at 17,003.28 points. The British Footsie, penalized by the health sector with notably AstraZeneca (-2.694%), on the other hand fell by 0.95%.
The EuroStoxx 50 index increased by 0.23%, the FTSEurofirst 300 gained 0.09% and the Stoxx 600 gained 0.01%.
Over the week as a whole, the CAC 40 gained 0.93% and the Stoxx 600 1.01%.
At the close in Europe, the Dow Jones fell by 0.09% and the Standard & Poor’s 500 by 0.036868%, while the Nasdaq advanced by 0.46%.
In a session corresponding to the “four witches”, the Vix index measuring volatility on Wall Street was at 12.22 points (-2.08%), while its European equivalent ended at 12.12 points (-2, 64%).
The session was mainly dominated by speculation on central bank interest rates after a week marked by decisions from the European Central Bank (ECB), the Bank of England (BoE), the Swiss National Bank ( BNS) and especially the American Federal Reserve (Fed).
These four banks opted for the status quo on their respective rates but only the Fed mentioned a reduction in the cost of borrowing next year, reinforcing the enthusiasm of investors in the “Christmas rally”.
John Williams, the president of the New York Fed, however declared on CNBC that it was “premature” to think about a rate cut, raising the probability of a reduction in the interest rate of money in the United States in March 2024 at 64.3% compared to a probability of almost 80% before this interview.
Expectations of a rate cut on the markets, however, remain significant, especially since François Villeroy de Galhau, the governor of the Bank of France, affirmed that the next major decision of the ECB would be, barring any surprises, a reduction in the rent of money.
The decline in activity in December in the euro zone with a preliminary composite PMI at 47.0 compared to 47.6 in November, which raises fears of a recession, also argues for a reduction in the ECB’s borrowing costs.
VALUES IN EUROPE
Atos soared 20.52%, the group being in “advanced” discussions with Airbus (-0.38%) for its cybersecurity division.
Antin Infrastructure Partners jumped 7.41% thanks to the increase in JPMorgan’s recommendation to “overweight”.
Campari fell 2.86% after the announcement of the Italian spirits group’s purchase of the French cognac company Courvoisier for $1.2 billion, its largest acquisition.
RATES The yield on the ten-year German Bund ended down more than 11 basis points, at 2.017%, at a nine-month low, in a context of slowing activity which could push the ECB to reduce its rates of interest.
Deutsche Bank expects the ECB to cut rates by 150 basis points by the end of 2024, while Barclays forecasts an initial cut of 25 basis points in April, followed by further cuts at each meeting until January 2025 .
The yield on ten-year Treasuries, which fell on Thursday to its lowest level since July, below 4%, fell a little more than a basis point on Friday, to 3.9129%.
CHANGES
The dollar strengthens, by 0.51%, against a basket of reference currencies, but is heading towards its worst weekly session since mid-July against a backdrop of expectations of a reduction in Fed rates.
The euro lost 0.79%, to 1.0904 dollars, and the pound sterling lost 0.46% to 1.2707 dollars.
OIL
The oil market is heading towards its first weekly gain in two months after the International Energy Agency (IEA) revised upwards crude demand growth forecasts for 2024.
Brent rose 0.25% to $76.81 per barrel and American light crude (West Texas Intermediate, WTI) gained 0.1% to $71.65.
TODAY’S INDICATORS
The consumer price index in France, harmonized according to European standards (IPCH), stood at 3.9% over one year in November, according to INSEE data.
The UK economy is expected to escape recession with the S&P Global/CIPS UK composite PMI rising to 51.7 in December.
Manufacturing activity in the New York region fell more than expected in December, to -14.5, the Empire State index shows.
Industrial production in the United States increased less than expected in November, at 0.2%, official statistics show.
TO BE CONTINUED ON MONDAY:
(Writing by Claude Chendjou, edited by Kate Entringer)
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