Europe rebounds thanks to the results, Wall Street awaits the Fed – 01/25/2022 at 19:17


by Claude Chendjou

PARIS (Reuters) – European stock markets rebounded on Tuesday after the sharp decline of the previous day, but on Wall Street the trend was still negative at the midpoint, as equity markets were weighed down by the continuation of geopolitical tensions in Eastern Europe. Is and uncertainties about the monetary policy decisions of the US Federal Reserve (Fed).

In Paris, the CAC 40 ended with a gain of 0.74% to 6,837.96 points. The British Footsie took 1.09% and the German Dax 0.75%.

The EuroStoxx 50 index advanced 0.75%, the FTSEurofirst 300 0.9% and the Stoxx 600 0.8%.

The surprise improvement in the Ifo business climate index in Germany and the solid results published by several companies on the Old Continent enabled the indices in Europe to begin to rebound.

The latest IBES data from Refinitiv predicts a 48.6% rise in earnings for Stoxx 600 companies in the fourth quarter.

The bearish trend on Wall Street and the weak rebound in Europe from Monday’s fall, however, suggest that investors are keeping an eye on the outcome of the Fed’s two-day Federal Open Market Committee meeting.

The market anticipates four rate hikes this year, including a 25 basis point increase in March.

Risk appetite is also dampened by fears of a military escalation around Ukraine after NATO sent reinforcements to Eastern Europe over fears of a Russian invasion of Ukraine.

On the economic indicator side, the International Monetary Fund (IMF) lowered its growth forecast for the world economy by 0.5 points to 4.4%, seeing in the COVID-19 pandemic, inflation, the problems of supply and monetary policy in the United States additional risk factors.

VALUES IN EUROPE

In Europe, on a sectoral level, banking stocks (+2.8%) posted one of the strongest increases in the Stoxx 600, alongside energy (+2.5%), telecoms (+2 .4%) and raw materials (+1.6%).

On the results side, the Swedish group Ericsson gained 7.6% thanks to an adjusted operating profit higher than expectations in the fourth quarter. Its competitor Nokia advanced 3.3%.

Logitech (+6.7%) has, for its part, benefited from the increase in its profit forecast for this year.

Among stocks in the red, Credit Suisse lost 1.1% after a fourth-quarter earnings warning, falling to a 20-month low.

Rémy Cointreau dropped 2.08%, its forecasts being considered cautious, while Swatch Group fell 3.4% despite announcing a double-digit growth target for sales this year in local currency.

On the SB120, the retirement home operator Orpea plunged more than 20%, affected by the upcoming publication of a book denouncing the management of certain nursing homes in the private sector.

AT WALL STREET

At the close in Europe, the Dow Jones was down 1.08%, the Standard & Poor’s 500 by 1.9% and the Nasdaq by 2.7%, with all sector compartments in the red except Energy.

The volatility index, also called the “fear index”, climbed nearly 10% to 32.75 points.

On the results side, IBM gained 2.7% after earnings and sales above expectations in the fourth quarter, but the technology compartment, down 3.07%, continues to suffer releases.

American Express jumped 8%, the specialist in means of payment having published Tuesday a quarterly profit better than expected.

On the downside, General Electric fell 7.3% after reporting quarterly sales affected by supply problems.

CHANGES

On the foreign exchange market, the dollar, up 0.23%, continues to appreciate against a basket of reference currencies, supported by its status as a safe haven and expectations of a rate hike in the United States.

The euro, down 0.38%, is trading at 1.1279 dollars, against a recent peak on January 18 at 1.1421.

RATE

Bond yields are moving into positive territory, with the US 10-year gaining 2.7 basis points to 1.7618% on the eve of the release of the Fed’s monetary policy statement.

In Europe, the ten-year German Bund rate, a benchmark for the euro zone, rose 1.9 points to -0.081%, after falling to -0.11% on Monday, the lowest since January 5. Its French equivalent of the same term gained two points at 0.330%.

OIL

The oil market is also showing a rebound from Monday’s losses, with Brent crude advancing 1.61% to $87.68 a barrel and US light crude (West Texas Intermediate, WTI) 1.79% to $84.8.

(Report Claude Chendjou, edited by Sophie Louet)



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