by CORENTIN CHAPPRON
PARIS (Reuters) – European stock markets ended a volatile session in the red on Wednesday for all assets, under pressure from statements by Federal Reserve Chairman Jerome Powell, who reiterated the “hawk” message to the United States Congress. of the central bank. In Paris, the CAC 40 lost 0.46% to 7,261.0 points and the German Dax 0.55%, against -0.13% for the British Footsie. The EuroStoxx 50 index ended the session down 0.39%, the FTSEurofirst 300 0.43% and the Stoxx 600 0.50%.
“Inflation has eased somewhat since the middle of last year,” Jerome Powell told the House of Representatives as the Fed-favored inflation gauge fell from a peak of around 7% last year to 4.4% in April.
“However, it will take time for the effects of the monetary restriction to be fully felt, in particular on inflation,” the central banker insisted, making it increasingly difficult to determine whether interest rates are high enough to bring inflation back to target.
Jerome Powell’s statements aim to redirect market expectations on rates, which remained stable during his hearing, as the risk is that short rates will not ease and with them financial conditions, according to IG strategists .
The emphasis placed by the Fed leader on the fight against inflation also indicates that the central bank does not believe that its second mandate, the stability of the labor markets, should for the moment come back into line account.
VALUES
The energy sector posted the strongest increase in Europe (+1.32%), with TotalEnergie posting the strongest growth in the CAC 40, up 2.73%. The positive outlook for oil supported the sector.
Deutsche Post, the holder of DHL, lost 2.60% after results deemed disappointing by the American FedEx.
Casino rose 11.30%, the best performance of the SBF 120, the concert led by Fimalac now holding 12.05% of the capital of the distributor, according to a press release published by the AMF.
During its investor day, Volkswagen set its new financial targets, aiming for annual revenue growth of 5% to 7% by 2027, a significant improvement on its current performance. The action, however, ended down 0.86%.
ON WALL STREET Statements by Jerome Powell, who indicated that the Fed could raise rates again as the fight against inflation was “far from over”, weighed on US equities.
At the time of closing in Europe, the New York Stock Exchange continued its decline initiated at the start of the session: the Standard & Poor’s 500 fell by 0.30%, against a drop of 1.30% for the Nasdaq Composite, more sensitive to monetary policy.
CHANGES
Jerome Powell’s comments were not enough to support the dollar, which lost 0.17% against a basket of benchmark currencies. The euro, on the other hand, continues to advance against the dollar, up 0.34% to 1.0952 dollars.
The pound erased some of its losses, but ended the session down 0.21% against the greenback, at 1.2736 dollars.
RATE
European bond markets were volatile during the session, but closed with modest gains.
The yield on ten-year German government bonds rose 2.3 basis points to 2.4280%, compared to nearly three points for the two-year Bund to 3.1850%. In the United States, ten-year Treasuries yields rose 4.8 basis points to 3.7751%, against 3.9 to 4.7388% for two-year sovereigns.
OIL
Jerome Powell’s statements supported oil as investors anticipate that a US economy on a sustainable path, which will see inflation return to target, will benefit crude demand.
Brent gained 1.34% to 76.91 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.73% to 72.41 dollars.
TO BE CONTINUED :
The Bank of England’s monetary policy decision is expected for Thursday at 11:00 GMT.
(Report Corentin Chapron)