PARIS (Reuters) – European markets ended sharply lower on Tuesday, ahead of the next decision from the European Central Bank, inflation in the United States and the opening of the quarterly results season.
In Paris, the CAC 40 lost 0.86% to 8,049.17 points, while the German Dax fell by 1.32% and the British Footsie by 0.11%.
The EuroStoxx 50 index ended the session down 1.09%, compared to 0.64% for the FTSEurofirst 300 and 0.61% for the Stoxx 600.
The ECB will meet on Thursday and is expected to maintain its key rate at its current level, despite the positive surprises on the latest inflation figures.
“The latest publications (…) certainly surprised the downward consensus with a figure 10 basis points lower than expected, but they were in fact fully aligned with the ECB’s forecasts”, underlines Kevin Thozet, member of the Carmignac investment committee.
“For the moment, Madame Lagarde’s scenario is following its course. Thus the progress made on the disinflation front corroborates the forecasts of her services and makes it possible to envisage a first reduction in monetary policy rates at the beginning of June.”
Conversely, investors fear an upward surprise in American inflation, expected on Wednesday.
The figure for March should be higher than that of February, according to the consensus, already surprised by the resistance of labor markets to rate increases.
A figure in line with the consensus may not be enough to revive appetite for risk, as the results season begins on Friday in the United States.
Investors will be watching for any signs of weakness in the figures to be released, as analysts revise downward their outlook for revenue growth in 2024.
Axel Botte, market strategy director at Ostrum AM, also points out that the $90 barrel of oil has weighed on stocks. “Oil is once again derailing the stock markets,” notes the strategist.
VALUES
Rheinmetall fell 6.89% as traders worried about the continued rally in the stock, which took the price to a record high.
The defense sector in Europe declined in the wake of the German group: SAAB lost 9.76%, Leonardo 8.95%, Thales 4.89% and Dassault Aviation 3.52%.
Luxury fell, with investors expecting a sharp slowdown in sales in the first quarter while Chinese consumption remained sluggish. LVMH declined by 1.5%, Hermès by 2.44% and Richemont by 0.93%.
Arkema fell 2.48%, searches on the group’s sites having been carried out on Tuesday.
Atos presented its refinancing plan on Tuesday, which is based on finding 1.2 billion euros in new money and converting half of the debt into shares. The very volatile title dropped 13.64%.
EssilorLuxottica fell 1.55% after HSBC lowered its recommendation to “hold”, as the bank expressed concern about the eyewear maker’s near-term prospects.
BP gained 1.31% thanks to forecasts for energy production in the first quarter that were higher than in the previous three months.
A WALL STREET
Wall Street falls before the publication of the CPI inflation indicator on Wednesday.
At closing time in Europe, trading on the New York Stock Exchange indicated a drop of 0.35% for the Dow Jones, compared to 0.28% for the Standard & Poor’s 500 and 0.2% for the Nasdaq. Composite.
RATE
European yields continue their decline that began in December, while the prospect of an easing of monetary policy in 2024 becomes clearer.
The German ten-year yield fell 7.6 bps to 2.364%, while the two-year yield fell 3.9 bps to 2.886%.
At the close of the European interest rate markets, the ten-year Treasury yield lost 5.6 bp to 4.3676%, compared to 4.4 bp for the two-year rate, to 4.7447%.
CHANGES
Foreign exchange markets are wait-and-see ahead of US CPI inflation.
The dollar is stable against a basket of reference currencies, while the euro remains at $1.0854. The pound sterling strengthened by 0.14% to $1.267.
OIL
Crude prices are falling despite geopolitical tensions and the drop in Mexican exports in April, while the markets are focused on the publication of CPI inflation in the United States.
Brent fell by 0.67% to $89.77 per barrel, American light crude (West Texas Intermediate, WTI) decreased by 0.96% to $85.6.
TO BE CONTINUED ON WEDNESDAY:
(Written by Corentin Chappron, edited by Kate Entringer)
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