(Reuters) – European stock markets ended sharply lower on Tuesday against a backdrop of geopolitical tensions and rising bond yields, with the Federal Reserve’s plans to cut rates raising more and more doubts.
In Paris, the CAC 40 ended down 1.4% at 7,932.61 points. The British Footsie fell by 1.82% and the German Dax by 1.57%.
The EuroStoxx 50 index lost 1.45%, the FTSEurofirst 300 1.49% and the Stoxx 600 1.58%.
Geopolitical tensions in the Middle East after Iran’s attack on Israel on Saturday have dampened risk appetite, while bond yields rise as markets become increasingly skeptical of an upcoming Fed rate cut. the light of the strength of the American economy.
The vice president of the US central bank, Philip Jefferson, said on Tuesday that the institution was prepared to maintain its restrictive monetary policy if inflation did not slow down as expected.
Faster-than-expected growth in China’s economy in the first quarter will likely continue to put pressure on Treasuries as investors fear a reacceleration of inflation, according to Swissquote analyst Ipek Ozkardeskaya.
“There is certainly not much in the news that would provide incentive to take risks and there is a growing list of factors that provide incentives to refrain from buying and manage exposures,” said Chris Weston , analyst at Pepperstone.
Markets now expect a total of 43 basis points of Fed rate cuts in 2024, up from 48 basis points on Monday and 160 on January.
In Europe, the President of the European Central Bank (ECB), Christine Lagarde, on the other hand told the financial channel CNBC on Tuesday that, barring any major surprises, Frankfurt would soon reduce its rates.
VALUES
All STOXX 600 compartments ended in the red, with core resources and banks suffering particularly.
Anglo American and Rio Tinto fell 3.4% and 2.8%, respectively, as non-ferrous metal prices fell, weighed down by a stronger US dollar and weaker Chinese industrial production data. foreseen.
Arcelormittal, downgraded by Deutsche Bank to “hold” from “buy” and suffering from falling metal prices, lost 6.8%.
Among banks, BNP Paribas, Société Générale and Crédit Agricole lost 2.9%, 2.5% and 1.8% respectively.
British fashion chain Superdry, facing weak demand and a lack of liquidity, lost 23% after announcing its recovery plan.
Dr Martens fell 29% after appointing a new chief executive and reporting a tough 2025 financial year due to weak US demand.
A WALL STREET
The New York Stock Exchange is hesitant as rising Treasury yields and geopolitical concerns appear to offset a string of generally positive first-quarter corporate results.
At closing time in Europe, the Dow Jones rose 0.40%, while the Standard & Poor’s 500 fell 0.02% and the Nasdaq Composite advanced 0.01%.
TODAY’S INDICATORS
The IMF on Tuesday raised its forecast for global growth in 2024 thanks to the strength of the American economy, saying it expects real growth in global GDP of 3.2% in 2024, revised upwards by 0.1 point. percentage compared to the January forecast.
In the United States, industrial production increased by 0.4% last month, an increase in line with expectations.
CHANGES
The dollar, supported in part by rising Treasury yields, gained 0.05% against a basket of benchmark currencies. The euro rose 0.01% to $1.0623.
RATE
Euro zone bond yields hit new one-and-a-half-month highs on Tuesday due to doubts over rate cuts in the United States, with the bond market also experiencing some volatility with tensions between Israel and Israel. ‘Iran.
The German ten-year yield gained more than 5 bps to 2.484% and that of the two-year rate rose almost 3 bps to 2.931%.
The US bond markets are also progressing, with the ten-year bond market gaining around 3 basis points to 4.655%. The two-year rate advances by more than 2 bp to 4.9636%.
OIL
Oil prices were stable on Tuesday after the United States announced plans to impose new sanctions on Iran in response to the weekend attack on Israel.
Brent rose 0.06% to $90.15 per barrel and American light crude (West Texas Intermediate, WTI) gained 0.14% to $85.53.
(Written by Diana Mandiá)
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