The Palais Brongniart, former Paris Stock Exchange
PARIS (Reuters) – European stock markets ended a session marked by risk aversion in the red on Tuesday, as poor Chinese economic figures added to the “hawkish” comments from Fed governors last week.
In Paris, the CAC 40 lost 0.27% to 7,294.2 points and the German Dax 0.55%, against 0.25% for the British Footsie. The EuroStoxx 50 index ended the session down 0.46%, the FTSEurofirst 300 0.54% and the Stoxx 600 0.59%.
The day was first marked by concerns about the dynamism of Chinese activity, whose weaker-than-expected recovery could weigh on the global economy. US markets, closed on Monday, have also incorporated the “hawkish” comments of two Fed governors, made on Friday afternoon, which imply a more marked slowdown in the US economy.
“The equity markets seem to be positioned on a scenario of a near peak rate, a disappearance of inflation and a recession”, estimate the strategists of Societe Generale, referring to the American markets.
VALUES
Sanofi ended the session at the top of the CAC 40, up 3.68%, after announcing on Tuesday that it had won the arbitration initiated by Boehringer Ingelheim in the case of Zantac, a treatment for gastric acidity accused of being carcinogenic .
Renault posted the largest decline in the CAC40, down 3.76%, following the lawsuits brought by its former CEO Carlos Ghosn against the group’s partner, Nissan, from whom he is claiming a billion dollars.
German chemicals group Covestro posted the best performance on the Stoxx 600, up 12.90% as Abu Dhabi National Oil Company (ADNOC) made a takeover bid valuing the target at more than 10 billion euros, according to a source familiar with the matter.
Conversely, Lanxess closed down 15.39%, the worst performance of the Stoxx 600, as investors sanctioned the downward revision of profit forecasts for the second quarter and the full year.
On the SBF 120 side, Valneva shares soared 12.32% following encouraging experimental results for a vaccine against chikungunya.
AT WALL STREET
Statements by Fed Governors Christopher Waller and Thomas Barkin, who expressed concern last Friday about the persistence of inflation, weighed on the outlook for risky assets.
At the time of closing in Europe, the New York Stock Exchange continued its decline initiated at the start of the session, the Dow Jones being down 0.91%, against 0.72% for the Standard & Poor’s 500 and 0, 60% for the Nasdaq Composite.
CHANGES
Investors seeking protection returned to the dollar, which also benefited from higher interest rate prospects and rose 0.13% against a basket of benchmark currencies.
The euro is trading at $1.0905 (-0.17%), while the pound fell ahead of the BoE’s decision at $1.2741 (-0.39%).
The yuan hit its lowest level since November 2022, as the rate differential between China and the United States widened. The currency was trading at 7.1811 yuan to the dollar (+0.28%).
RATE
European long rates fell sharply on Tuesday, supported by the search for safe assets. The yield on ten-year German government bonds fell 11.8 bp to 2.4000%, while the 10-year OAT or BTP posted comparable falls, by 10.7 bp to 2.9250. % and 10.2 bps at 4.0270%, respectively.
Short rates fell more modestly, by 5.3 bp for the 2-year Bund, to 3.1570%. In the United States, yields on ten-year Treasuries fell by 5.8 bp to 3.7130%, against a fall of 4.7 bp to 4.6762% for 2-year sovereigns.
OIL
Oil ends a volatile session lower as traders remain unconvinced that the PBoC’s rate cuts will be enough to support Chinese activity in the near term.
Brent lost 1.47% to $74.97 a barrel and US light crude (West Texas Intermediate, WTI) fell 2.31% to $70.12.
TO BE CONTINUED: (nL8N38C4K7)
(Written by Corentin Chapron)