A trader works at his desk at CMC Markets in London
PARIS (Reuters) – Monday’s session was mixed for European stocks, hesitant after an uncertain election in Spain and weaker than expected PMI indicators weighed on investor sentiment.
In Paris, the CAC 40 lost 0.07% to 7,427.31 points, while the German Dax gained 0.08% against 0.19% for the British Footsie.
The EuroStoxx 50 index ended the session down 0.19%, while the FTSEurofirst 300 and the Stoxx 600 were flat.
In Spain, no party has won the seats necessary to obtain an absolute majority in Parliament at the end of the early legislative elections organized on Sunday.
“The continuing political uncertainty is clouding the economic outlook and hampering the necessary fiscal and economic reforms,” summarizes ING.
PMI activity data released on Monday also showed that the slowdown in the European economy was worsening, while rate hikes are not over, raising the risk of recession in the euro zone.
“The composite PMI slipping into contractionary territory is a reminder that recession risks remain, especially as there is growing evidence of the lagged impact of monetary tightening,” wrote Felix Feather, European economics analyst at abrdn.
“However, the (ECB) will remain focused on inflation for the time being.”
Furthermore, the publication of numerous results and the Federal Reserve’s monetary policy meeting are prompting investors to be cautious.
VALUES
Ubisoft and Elis soared to the top of the SBF120 after an upward revision of price targets, respectively by Wells Fargo and Bank of America. Ubisoft gained 5.94% and Elis 3.92%.
Plastic Omnium reported on Monday a 35% jump in its turnover in the first half, and also confirmed its annual objectives, which raised the title by 2.91%. The Bavarian Nordic pharmaceutical group fell 25.95%, at the bottom of the STOXX 600, after it halted its program to develop a vaccine against respiratory syncytial virus.
OCADO finished top of the Stoxx 600, up 14.26% as the online grocery store settled all patent disputes with Norwegian robotics company AutoStore. The advance in oil prices supported the energy sector, which rose 1.44%, leading the Stoxx sectors.
AT WALL STREET
US markets are up, with activity indicators released on Monday showing that activity is moderating, but remains in expansion territory as manufacturing activity unexpectedly rebounded.
At closing time in Europe, the Dow Jones gained 0.56%, while the Standard & Poor’s 500 rose 0.47% and the Nasdaq Composite stagnated.
RATE
European fixed income markets adjusted to disappointing PMI data, pulling back slightly as investors position themselves for heightened recession risks.
The ten-year German yield lost 3.6 bp to 2.392%, while that of the two-year rate fell 5.3 bp to 3.183%.
The ten-year Treasury yield stagnated at 3.837%, while the two-year rate held steady at 4.8589%.
CHANGES
Poor activity data weighed on the euro, which fell against the greenback by 0.40% to 1.1078 dollars.
The dollar strengthened by 0.25% against a basket of benchmark currencies ahead of the Fed meeting, while the pound sterling lost 0.24% to 1.2824% dollar.
OIL
Oil markets are hoping for further support from China for its economy, with the Politburo, the top political body, meeting this week supporting crude even as the ECB and Fed are expected to raise rates.
Brent rose 2.08% to 82.76 dollars a barrel, US light crude (West Texas Intermediate, WTI) rising 2.39% to 78.91 dollars.
(Report Corentin Chapron)