by Claude Chendjou
PARIS (Reuters) – European stock markets ended sharply lower on Thursday after the publication of German inflation figures, now at a peak of more than 25 years, and on Wall Street the trend was also negative at mid-session, the fears of recession and contagion from the financial strains of recent days in the UK having regained the upper hand.
In Paris, the CAC 40 ended down 1.53% at 5,676.87 points. The British Footsie lost 1.77% and the German Dax lost 1.71%.
The EuroStoxx 50 index fell by 1.69%, the FTSEurofirst 300 by 1.59% and the Stoxx 600 by 1.67%.
According to the first estimate published Thursday by Destatis, the federal statistics office, inflation in Germany accelerated further in September with an HICP consumer price index up 10.9% year on year, its highest level since 1996.
German Chancellor Olaf Scholz has presented a €200 billion “shield” meant to protect businesses and households against the impact of soaring energy prices.
Pending the first inflation figures for the whole of the euro zone, which will be published on Friday, analysts, like Alexander Krüger of the Hauck Aufhaeuser Lampe bank, believe that the European Central Bank (ECB) , will now have to act “quickly” and “vigorously” with a new turn of the monetary screw.
Several ECB officials on Thursday called for a further sharp rise in key rates in October.
In the United States, where the contraction of the economy in the second quarter was confirmed at an annualized rate of 0.6% compared to the previous three months, the president of the Federal Reserve of Saint-Louis, James Bullard, estimated that the risk of recession was high, but the US central bank needed to raise rates quickly to reach the appropriate minimum level to fight inflation.
The United Kingdom meanwhile remains immersed in financial turmoil, the beneficial effect of Wednesday’s intervention by the Bank of England having been short-lived.
British Prime Minister Liz Truss, however, defended her budget plans on Thursday, assuring that they were the best way to revive economic growth and protect her compatriots from the consequences of the energy crisis.
VALUES
Apart from basic resources (+0.69%), all the major compartments of the European quotation ended in the red, the most marked decline being for distribution (-4.44%).
The Swedish clothing giant H&M (-5.85%) weighed on the sector after the announcement of a sharp drop in its quarterly taxable profit, precisely because of inflation. Its competitor Inditex dropped 1.82%.
In Paris, Orpea fell 21.41% after posting a half-yearly net loss, while Accor gained 0.65% on the back of its annual gross operating surplus forecast.
Atos jumped 10.63%, the group having announced that it would not follow up on an offer from Onepoint on its Evidian branch for an enterprise value of 4.2 billion euros.
Elsewhere in Europe, Porsche AG shares ended their first trading session unchanged at 82.50 euros, after rising in the morning to 86.76 euros.
AT WALL STREET
At the close in Europe, the Dow Jones was down 1.14%, the Standard & Poor’s 500 was down 1.69% and the Nasdaq was down 2.47%, with half of the major S&P-500 sectors posting a decline of more than 2%.
Technology groups Amazon, Apple, Microsoft, Meta Platforms and Tesla lost 1.9% to 5.5%, amid renewed risk aversion, with BofA Global Research further downgrading its recommendation on Apple to ” neutral” versus “buy”.
American airlines also fell, like Southwest Airlines (-1.91%), United Airlines Holdings (-2.38%) and Delta Air Lines (-3.32%), after the cancellation on Thursday nearly 2,000 flights due to Hurricane Ian.
THE INDICATORS OF THE DAY
Unemployment claims in the United States unexpectedly fell last week to 193,000 from 209,000 (revised) the previous week. [ZON006FJ4]
CHANGES
On the foreign exchange market, the dollar yielded at the time of the close of the European stock exchanges 0.23% against a basket of reference currencies.
The euro, up 0.43%, is trading at 0.9776 dollars.
The pound rallied more sharply against the greenback, to 1.106 (+1.59%) after statements by Huw Pill, chief economist of the BoE, that the new British bond buying program is not intended to cap yields or to lower government borrowing costs but to address market failures.
RATE
Bond yields in Europe ended sharply higher as investors’ attention was once again focused on inflation.
That of the ten-year German Bund, a benchmark for the entire euro zone, took 6.5 basis points to 2.21% and that of the British “gilt” of the same maturity jumped 12.9 points to 4.136 %.
In the United States, the yield on ten-year Treasury bonds took a little more than two points, to 3.73%.
OIL
Oil prices are volatile, with investors hesitating between fears over demand and a possible OPEC+ production cut.
At the close of stock exchanges in Europe, Brent dropped 0.12% to 89.43 dollars a barrel after rising in session above 90 dollars. On the other hand, American light crude (West Texas Intermediate, WTI) rose 0.4% to 82.48 dollars a barrel.
TO BE FOLLOWED ON FRIDAY:
Publication at 09:00 GMT of inflation in the euro zone (1st estimate)
THE MARKET SITUATION:
(Some data may show a slight shift)
THE FENCE IN
EUROPE
Indices Last Var. Var. %YTD
Points
Eurofirst 300 1519.74 -24.57 -1.59% -19.60%
Eurostoxx 50 3279.04 -56.26 -1.69% -23.72%
CAC 40 5676.87 -88.14 -1.53% -20.64%
Dax 30 11,975.55 -207.73 -1.71% -24.61%
FTSE 6881.59 -123.80 -1.77% -6.81%
SMI 10126.99 -93.77 -0.92% -21.35%
The values to follow
Paris and Europe:
[WATCH/LFR]
THE TREND TO
WALL STREET
Indices Last Var. Var. %YTD
Points
Dow Jones 29292.88 -390.86 -1.32% -19.39%
S&P 500 3648.91 -70.13 -1.89% -23.44%
Nasdaq 10750.39 -301.24 -2.73% -31.29%
Nasdaq 100 11176.71 -317.12 -2.76% -31.52%
Minutes of the meeting at
Wall Street: [.NFR]
“The Day Ahead” – Update on the
next session on Wall Street [DAY/US]
CHANGES
Standby Price Var.% YTD
Euro/Dlr 0.9794 0.9734 +0.62% -13.85%
DLR/Yen 144.28 144.16 +0.08% +25.40%
Euro/Yen 141.32 140.32 +0.71% +8.44%
DLR/CHF 0.9785 0.9761 +0.25% +7.26%
Euro/CHF 0.9585 0.9500 +0.89% -7.56%
Stg/Dlr 1.1097 1.0888 +1.92% -17.97%
Index $ 112.3180 112.6040 -0.25% +16.79%
GOLD
Var. %YTD
Gold Spot 1662.90 1659.44 +0.21% +9.62%
RATE
Last Var. Spread/Bund
(pts)
Future Bunds 137.74 -0.17
10-year Bunds 2.18 -0.03
Bund 2 years 1.81 -0.02
10-year OATs 2.79 -0.03 +61.30
10-year Treasury 3.73 +0.02
Treasury 2 years 4.19 +0.10
OIL
Previous Price Var. Var.% YTD
US light crude 82.64 82.15 +0.49 +0.60% +35.01%
Brent 89.63 89.32 +0.31 +0.35% +35.74%
(Written by Claude Chendjou, edited by Marc Angrand)