by Diana Mandia
(Reuters) – European stock markets ended higher on Thursday, after the European Central Bank (ECB) decided to leave its key interest rates unchanged while ruling out an imminent cut due to inflationary risks.
In Paris, the CAC 40 ended up 0.11% at 7,464.2 points. The British Footsie gained 0.03% and the German Dax 0.1%.
The EuroStoxx 50 index increased by 0.41%, the FTSEurofirst 300 by 0.32% and the Stoxx 600 by 0.29%.
As expected and for the third time in a row, the ECB chose Thursday to maintain its key rates at their current levels, disinflation continuing in the euro zone, but ruled out an imminent drop in the cost of borrowing, which is at its highest high level since the creation of the euro.
If the ECB says it sees that the disinflationary dynamic continues, its president Christine Lagarde stressed during a press conference that wage and geopolitical tensions, particularly in the Middle East, are inflationary risk factors that should be monitored. .
“The ECB has kept interest rates unchanged as expected, but it all depends on what happens in the coming months. Will hopes of a cut in the spring come true? It looks like not,” Neil said Birrell, of Premier Miton Investors.
RATE
European bond yields declined after the ECB announcements.
The German ten-year yield, which was trading at 2.36% before the central bank’s press release, lost 5 basis points to fall to 2.2%, while the two-year yield, the most sensitive to expectations in in terms of interest rates, lost more than 9 bp to 2.6%. The yield on the Italian 10-year bond ended at 3.823%, down 7 bps.
The American bond markets also fell after the publication of quarterly GDP in the United States, the ten-year one losing around 3 basis points to 4.1%, and the two-year one losing more than 4 bps to 4.3%.
CHANGES
The euro, which had reached 1.0886 dollars before the ECB’s decision, fell by 0.44% to 1.0835 and the dollar gained 0.34% against a basket of reference currencies following the release of US GDP figures.
TODAY’S INDICATORS
In addition to the ECB meeting, markets awaited Thursday the publication of preliminary US gross domestic product (GDP) figures for the last quarter of 2023, which show that the US economy grew by 3.3% year-on-year between October and December, more than expected. These figures suggest that the Fed will not be in a hurry to cut rates while the economy remains generally solid.
Investors also learned that German business sentiment deteriorated in January for the second month in a row, as Europe’s largest economy struggles to emerge from recession.
In France, the business climate in industry remained stable in January, according to the monthly business survey published Thursday by INSEE.
VALUES
The technology sector ended up 1.75%, leading the STOXX, after the ECB’s monetary policy decision and the decline in bond yields.
STMicroelectronics lost 0.4% after announcing that its first quarter revenue would fall by more than 15% year-on-year.
ASML shares (+4.6%) reached a new record for the second consecutive day on Thursday, bringing the market capitalization of the Dutch group, one of the main suppliers to semiconductor manufacturers, above 350 billion of dollars.
Publicis, which announced investments of 300 million euros in artificial intelligence (AI) over the next three years on Thursday, gained 3.6%.
A WALL STREET
At closing time in Europe, the Dow Jones gained 0.29%, the Standard & Poor’s 500 0.49% and the Nasdaq Composite 0.62%, the US GDP figures published on Thursday reinforcing hopes of a soft landing of the economy.
OIL
Oil prices are rising on the back of a larger-than-expected drop in U.S. crude reserves last week, and as a new attack by Houthi rebels on ships off Yemen underlined the danger of geopolitical tensions for world trade.
Brent thus gained 1.75% to $81.44 per barrel and American light crude (West Texas Intermediate, WTI) increased by 1.85% to $76.48 CLc1.
(Written by Diana Mandiá, edited by Blandine Hénault)
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