Photo of a trader in London, England
European stock markets ended mixed on Tuesday, against a backdrop of a rebound in bond yields despite the conflict in the Middle East, while the markets once again focused on the trajectory of rates in the United States.
In Paris, the CAC 40 nibbled 0.11% to 7,029.7 points, while the German Dax was stable and the British Footsie advanced 0.58%.
The EuroStoxx 50 index ended the session stable, compared to a drop of 0.13% for the FTSEurofirst 300 and 0.10% for the Stoxx 600.
The risk aversion movement of last weekend has been reversed since Monday, with market operators having favored safe assets last Friday to protect themselves against a possible worsening of the situation in Israel during the weekend.
The impact of the conflict on the markets is therefore fading, but investors are keeping an eye on US President Joe Biden’s visit to Israel on Wednesday, and on Iran’s possible reaction to operations against Hamas.
Tuesday’s publication of retail sales and industrial production in the United States brought the trajectory of the Federal Reserve’s monetary policy into focus, while the central bank will meet on November 1 to decide on the evolution of its rate.
Retail sales have in fact surprised by their robustness, while industrial production progressed unexpectedly, and the good quarterly results published so far, including those of Goldman Sachs and Johnson & Johnson, paradoxically worry about the resistance of the American activity, despite a restrictive monetary policy.
“The September data and the upward revision of the August figures reinforce the idea that the US economy probably grew at an annualized rate of 4% in the third quarter”, underlines James Knightley, chief economist of ING, a surprising figure as the Fed’s key rate reaches 5.5%.
“Headwinds are expected to intensify, but for now, the U.S. consumer continues to defy the odds.”
US yields jumped in the wake of the publication of these figures and were heading towards their highest closing level since 2007.
RATE
Yields are jumping as retail sales could convince the Fed to keep rates high for longer than markets expect.
At the close of the rate markets in Europe, the ten-year Treasury yield soared by 11.1 bp to 4.8215%, while the two-year rate jumped by 9.4 bp to 5.1924%.
The yield on the German ten-year rose by 10 bps to 2.881%, while that of the two-year rate rose by 8.9 bps to 3.244%.
VALUES
Sodexo, Edenred and Elior increased by 1.62%, 4.11% and 3.06% respectively, in reaction to information from Les Echos according to which commissions on restaurant vouchers could ultimately not be capped.
Renault reported on Tuesday a 25% increase in sales over one year, which brought the title among the best performers in the CAC 40, up 1.25%.
Airbus advanced 3.55%, at the top of the CAC 40, after Jefferies raised its recommendation to “buy” from “hold”.
Ericsson fell 5.92% after reporting a contraction in third-quarter revenue on Tuesday due to a drop in demand for 5G equipment in North America, with uncertainty weighing on its mobile network activity expected to persist until 2024.
Its competitor Nokia lost 2.76%, while the sector index in Europe lost 0.81%.
The Belgian Umicore finished at the top of the Stoxx 600 (+12.97%) after reducing its net investment spending target for 2026, the Canadian government having granted it a subsidy of around 700 million euros to build a battery factory.
Nordic Semiconductor fell 20.09% at the bottom of the STOXX 600, as the Norwegian fabless chipmaker’s guidance came in below expectations for the fourth quarter.
A WALL STREET
Wall Street hesitates at closing time in Europe, under pressure from retail sales data stronger than expected by consensus but supported by good quarterly results.
At closing time in Europe, trading on the New York Stock Exchange indicated an increase of 0.31% for the Dow Jones, compared to 0.25% for the Standard & Poor’s 500 and a decline of 0.12%. for the Nasdaq Composite.
CHANGES
The dollar is weakening while around twenty statements from members of the Fed’s board of governors are expected this week. The dollar fell 0.16% against a basket of reference currencies, while the euro gained 0.31% to 1.0591 dollars.
The pound sterling dropped 0.13% to $1.22.
OIL
Oil is falling ahead of Joe Biden’s visit to Israel, which could help contain the conflict in the Gaza Strip.
Brent fell 0.42% to $89.27 per barrel, with American light crude (West Texas Intermediate, WTI) declining 0.74% to $86.02.
(Written by Corentin Chappron)