EUROPE IN THE GREEN AFTER THE FED, ENERGY AND BANKS IN SUPPORT
by Claude Chendjou
PARIS (Reuters) – European stock markets continued their third consecutive session in the green on Thursday, while on Wall Street the trend was also positive at the mid-point, with equity markets being supported mainly by corporate and equity results. macroeconomic indicators considered favorable as investors digest the latest announcements from the US Federal Reserve (Fed).
In Paris, the CAC 40 ended with a gain of 0.6% to 7,023.8 points. The British Footsie took 1.08% and the German Dax 0.42%.
The EuroStoxx 50 index gained 0.49%, the FTSEurofirst 300 0.6% and the Stoxx 600 0.65%.
The positive trend on the equity markets, in Europe as in the United States, is mainly driven by energy and banks.
The Fed hinted Wednesday evening, after two days of meetings, that it would probably raise interest rates in March but remained unclear on the possibility of an acceleration of its monetary tightening cycle.
Futures shows that markets are 97% pricing in five Fed rate hikes of 25 basis points each by the end of the year, up from four hikes before the institution’s meeting.
In Europe, eurozone money markets are pricing in a European Central Bank rate hike of more than 20 basis points by December.
In terms of statistics, the gross domestic product (GDP) of the United States increased by 6.9% at an annualized rate over the period October-December, thanks in particular to the rebuilding of business inventories to meet the recovery in demand, which which allows the American economy to post its strongest growth in nearly 40 years in 2021.
Unemployment claims in the United States, for their part, fell last week to 260,000, a figure in line with expectations.
VALUES IN EUROPE
On the European Stoxx 600, the banking sector (+1.33%) was particularly sought after in view of a rate hike by the US Federal Reserve.
Conversely, the European new technologies sector, down 1.7%, is one of the few to have finished in the red, being particularly sensitive to changes in the cost of credit.
In Paris, Crédit Agricole advanced by 0.6% and BNP Paribas by 0.8%. In Frankfurt, Deutsche Bank, which recorded its best annual profit in ten years, took 4.3%.
Against the trend in the “tech”, STMicroelectronics won a gain of 2% in favor of a quarterly profit above expectations.
The German SAP, on the other hand, fell by 5.9% after the announcement of the acquisition of a majority stake in the American “fintech” Taulia.
On the SBF 120, the results of Valeo (+1.1%) and Soitec (+0.7%) were well received, while Elior declined by 11.%, after having suspended its financial objectives for the ongoing exercise, citing a lack of visibility.
AT WALL STREET
At the time of the close in Europe, the Dow Jones advanced by 1.4%, the Standard & Poor’s 500 by 1.3% and the Nasdaq by 1%, the indices being supported by the financial compartment (+0.7%) , energy (+1.5%) and the rebound in high technologies (+1.4%).
The trend is also driven by the results of several companies as Refinitiv data forecasts a 24.4% growth in profits for S&P-500 companies in the fourth quarter.
Apple, which publishes after the close, gained 2.1%, while Microsoft advanced 3.1%. The American chemical company DOW jumped more than 6% after reporting a sales forecast above expectations for the current quarter.
On the downside, Tesla (-6.7%), which anticipates an increase of more than 50% in its vehicle deliveries this year, is penalized by its forecasts on the continuation of supply problems until 2023.
Intel, down nearly 5.5%, is for its part penalized on its profit forecast for the current quarter despite record sales in the last three months of 2021.
CHANGES
At foreign exchange, the dollar, up 1.27%, is trading at a peak since July 2020 against a basket of reference currencies, boosted by the rise in bond yields after the Fed’s announcements.
The euro fell to $1.1150 from a year-to-date high of $1.1482 on January 14.
RATE
On the bond market, the yield on ten-year Treasuries fell by 3.8 points to 1.8084% but that of two years, more sensitive to changes in rates, gained 9.3 points to 1.1842%, in expectation of faster-than-expected monetary tightening.
In Europe, the ten-year German Bund yield, a benchmark for the euro zone, also rose, gaining 1.3 points to -0.057%, while its French equivalent of the same maturity ended up at 0.346%.
OIL
At the close in Europe, oil prices were almost stable after having moved up for a large part of the session the day after the crossing of the 90 dollar mark for Brent, in a context of geopolitical tensions in Eastern Europe. is between Russia and the Western powers.
Brent fell 0.1% to 89.9 dollars a barrel and US light crude (WTI) traded at 87.25 dollars a barrel (-0.1%).
TO BE FOLLOWED ON FRIDAY:
(Some data may show a slight shift)
(Report Claude Chendjou, edited by Jean-Michel Bélot)