PARIS (Reuters) – European stock markets ended on a hesitant note on Wednesday, divided on the one hand between economic data which confirmed the slowdown in American activity and helped to ease tensions on the bond market, and on the other hand, a sharp decline in oil prices which weighed on associated values.
In Paris, the CAC 40 finished stable at 6,996.73 points, while the German Dax nibbled 0.1% and the British Footsie dropped 0.77%.
The EuroStoxx 50 index ended the session with an increase of 0.1%, compared to a decrease of 0.14% for the FTSEurofirst 300 and 0.14% for the Stoxx 600.
The American activity indicators published on Wednesday were greeted with relief by the bond markets, new private job creations and the ISM indicator of the services sector showing a weakening of the American economy and the labor market, linked to the transmission of the monetary policy of the Federal Reserve.
U.S. sovereign yields declined after hitting a 16-year high earlier this week, while German sovereign yields fell after hitting a session high since 2011.
While rising yields have been a major reason for the fall in risky assets since the Fed’s last policy meeting on September 19-20, Wednesday’s drop was not enough to support stocks . The fall of more than 3% in oil prices, linked to fears about demand, weighed down the trend at the end of the session.
Furthermore, the final composite PMI indicators published in the morning confirmed the contraction in activity in the euro zone, also weighing on sentiment.
RATE
The indicators published on Wednesday showed a slowdown in activity and job creation in the United States, confirming the diffusion of monetary policy to the economy and bringing some respite to American yields, under pressure since the last meeting of the Fed.
At the close of the European interest rate markets, the ten-year Treasury yield fell 5.6 bp to 4.7455%, while the two-year rate fell 7.5 bp to 5.0728%.
The yield on the German ten-year fell 1.6 bps to 2.94%, while that of the two-year rate eroded by 1.5 bps to 3.192%.
OIL
Crude is falling sharply as markets worry about the outlook for demand as Europe could tip into recession in the third quarter, and as some US indicators suggest a slowdown in activity.
Brent fell 3.31% to 87.91 dollars per barrel, American light crude (West Texas Intermediate, WTI) falling 3.4% to 86.2 dollars.
VALUES
Orange finished at the top of the CAC 40, up 1.93%, supported by the upgrade of Ofa Global Research’s recommendation to “buy” from “underperformance”.
TotalEnergies was the bottom of the CAC 40, falling 1.94% with oil prices. The energy sector posted the worst sectoral performance of the Stoxx 600, down 2.13%, with basic resources dropping 0.94%.
Infineon was the best performer on the Stoxx 50, rising 3.95%, after CFRA raised its recommendation from “hold” to “buy” thanks to a better-than-expected outlook in China.
The Scandinavian airline SAS fell 82.2% after announcing on Tuesday an offer to take over Air France-KLM with two financial partners.
Novartis gained 1.81% while its Sandoz division plunged 17.46% on the day of its IPO. Spanish fund manager Allfunds soared 10.59%, leading the Stoxx 600, after Spanish media reported that the group was considering a sale.
A WALL STREET
Wall Street hesitated at closing time in Europe, torn between concerns about American activity and the rebound in bond markets.
At closing time in Europe, trading on the New York Stock Exchange indicated an increase of 0.22% for the Dow Jones, 0.48% for the Standard & Poor’s 500 and 0.83% for the Nasdaq Composite.
CHANGES
The dollar is eroding in response to falling employment indicators, which give hope for a weakening of the American economy which would limit the restrictive bias of the Fed.
The dollar lost 0.26% against a basket of reference currencies, while the euro advanced 0.49% to 1.0516 dollars. The pound sterling rose 0.66% to $1.2155.
(Written by Corentin Chappron, edited by Jean Terzian)
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