European stock markets, sovereigns end higher after Powell


PARIS (Reuters) – European stock markets ended higher on Friday, relieved by the outlook for activity and inflation in the euro zone and the United States.

In Paris, the CAC 40 gained 0.48% to 7,346.15 points, while the German Dax gained 1.12% and the British Footsie 1.01%.

The EuroStoxx 50 index ended the session with an increase of 0.79%, compared to 0.98% for the FTSEurofirst 300 and 0.99% for the Stoxx 600.

Over the week, the CAC 40 gained 0.73% and the Stoxx 600 1.35%.

The final PMI activity indicators published on Friday surprised the euro zone, with activity contracting less than initially expected in November.

The American ISM manufacturing indicator, on the other hand, appeared weaker than expected, recording its twelfth consecutive month in contraction territory.

The markets also remain satisfied with the latest inflation data in the euro zone and the United States, with the process of disinflation continuing on both sides of the Atlantic.

Furthermore, Federal Reserve Chairman Jerome Powell reiterated Friday that inflation was still too high, and that it was premature to say that monetary policy was sufficiently restrictive.

The official acknowledged, however, that risks were now more balanced, and that signs of a soft landing were increasing, relieving investors.

Markets may now begin to focus on activity data, which points to a widespread weakening of economies.

“For stock valuations to hold up (…), global demand needs to become a key driver. The problem is that after the third quarter surprise, most soft data shows a consistent decline,” explains Florian Ielpo, head of research at Lombard Odier AM.

“We need to see more than a pivot for (the S&P 500 to exceed) 4,600 points: we need growth to continue to surprise us – can it do that?”

RATE

Yields are declining, while the slowdown in price dynamics is confirmed and American activity continues to decelerate.

At the close of the European interest rate markets, the ten-year Treasury yield lost 8.4 bp to 4.2664%, compared to a fall of 11.5 bp for the two-year rate, to 4.6005%.

The German ten-year yield fell 8.2 bps to 2.367%, while the two-year rate fell 14.9 bps to 2.667%.

VALUES

Worldline soared 5.87%, leading the CAC 40, Bloomberg having reported that Crédit Agricole is considering taking a stake in the payments group.

LVMH ended down 0.50%, at the bottom of the CAC 40, after Morgan Stanley lowered its recommendation from “overweight” to “line weighting”.

Societe Generale fell 0.76% after Goldman Sachs lowered its recommendation to “sell” and the announcement of an increase in its capital requirements by the European Central Bank (ECB).

Casino lost 8.31% after confirmation on Thursday by the distributor of the receipt of several offers for its hypermarkets and supermarkets in France.

Viaplay plunged 74.41% as the Swedish streaming group announced plans to raise new capital and restructure its debt as part of a bailout plan.

Anglo American jumped 7.89%, among the best performers on the Stoxx 600, after UBS raised its recommendation from “neutral” to “buy”.

A WALL STREET

Wall Street is mixed, with investors digesting Jerome Powell’s statements.

At closing time in Europe, trading on the New York Stock Exchange indicated an increase of 0.52% for the Dow Jones, compared to 0.44% for the Standard & Poor’s 500 and a stable Nasdaq Composite.

CHANGES

The dollar declines after Jerome Powell’s comments, which suggest an easing of US monetary policy.

The greenback lost 0.22% against a basket of reference currencies, while the euro lost 0.04% to 1.0882 dollars. The pound sterling advanced 0.51% to 1.2687 dollars.

OIL

Crude is moving cautiously, as the last OPEC+ meeting did not result in a joint decision on the group’s production.

Brent rose 0.37% to $81.16 per barrel, American light crude (West Texas Intermediate, WTI) rose 0.49% to $76.33.

TO BE CONTINUED ON MONDAY:

(Written by Corentin Chappron, edited by Tangi Salaün)

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