PARIS (Reuters) – European stocks ended sharply higher and Wall Street gained mid-session as the dollar lost ground and bond yields rose amid renewed risk appetite after positive news from of China and reassuring economic indicators.
In Paris, the CAC 40 gained 1.3% (82.42 points) to 6,430.19 points, its best closing since May 4. In London, the FTSE 100 rose 0.72% and in Frankfurt, the Dax gained 1.59%.
The EuroStoxx 50 index posted an increase of 1.52%, the FTSEurofirst 300 of 1.13% and the Stoxx 600 of 1.22%.
At the time of the close in Europe, Wall Street was also evolving in the green, the Dow Jones winning 0.84%, the Standard & Poor’s 500 1.46% and the Nasdaq Composite nearly 2%, thanks among other things to the progression of banking stocks, Citigroup (+7.50%) in the lead, and that of technology stocks, such as Cisco Systems (+3.13%).
General market sentiment improved with the announcement by the Shanghai authorities of the lifting of certain health restrictions applied in recent weeks in an attempt to stem the COVID-19 epidemic.
In addition, Chinese Vice-Premier Liu He affirmed Beijing’s desire to support the development of high technologies, which maintains the hope of a reduction in regulatory pressure on large companies in the sector.
THE INDICATORS OF THE DAY
In the United States, retail sales rose 0.9% in April, an increase in line with expectations, after rising to 1.4% in March, double the initial estimate.
US manufacturing output, for its part, posted growth that was twice as strong as expected at 0.8%.
In Europe, growth in the euro zone in the first quarter was revised slightly upwards to 0.3% and employment figures in France and Great Britain confirm the recovery of the labor market.
VALUES
The best sectoral performances of the day in Europe are for the commodity compartment, whose Stoxx index gained 3.42%, and for that of the banks (+1.88%), which benefits from both the renewed optimism about the economy and the rise in bond yields.
In Paris, Societe Generale, Crédit Agricole and BNP Paribas took between 2.27% and 3.62%.
The best performance of the CAC 40 is for Engie, whose share price jumped 5.33% after raising its annual results targets and announcing an agreement with Gazprom on the payment of its Russian gas purchases.
Daimler Truck (+6.49%) and Caixabank (+5.17%) also benefited from results hailed by analysts.
CHANGES
The return of risk appetite is penalizing the dollar, which lost 0.79% against other major currencies and is heading for a third consecutive session of decline after the 20-year high recorded on Friday.
On the contrary, the euro is the big winner of the day with a jump of 0.96%, its strongest progression over a session since March 9: to the decline of the greenback is added the carrying effect of the statements of Klaas Knot, the president of the Dutch central bank, on the possibility of a half-point hike in the deposit rate of the European Central Bank (ECB) in July.
RATE
The renewed interest in equities is diverting investors from the bond markets, which amplifies the rise in yields linked to expectations of a rapid rise in interest rates: that of the ten-year German Bund has gained more than ten basis points on the day at 1.044% and its US equivalent is up eight points at 2.9604%.
OIL
On the oil market, the fall in the dollar amplifies the double bullish effect of the prospect of an embargo by the European Union on Russian oil and the renewed hope of a recovery in Chinese demand.
Brent crude gained 0.09% to $114.14 a barrel after rising to 115.69, its highest level since March 28, and US light crude (West Texas Intermediate, WTI) gained 0.24% to 113 $.93 after a peak at 115.56.
(Written by Marc Angrand)