by Claude Chendjou
PARIS (Reuters) – European stock markets ended higher on Friday and Wall Street was also in the green mid-session, with equity markets supported in particular by new economic indicators in the United States which show a slowdown in the inflation while consumer spending remains strong.
In Paris, the CAC 40 ended with a gain of 1.64% to 6,515.75 points. The British Footsie took 0.27% and the German Dax 1.62%.
The EuroStoxx 50 index advanced 1.83%, the FTSEurofirst 300 1.45% and the Stoxx 600 1.42%.
Over the week as a whole, the Parisian index gained 3.66% and the Stoxx 600 2.98%, ending a series of eight weeks of weekly declines thanks to statistics that have reassured investors since the publication on Wednesday of the minutes of the last monetary policy meeting of the American Federal Reserve (Fed).
Another statistic, released this Friday by the US Department of Commerce, shows that the “core PCE” price index, the measure of inflation favored by the Fed, slowed in April to 0.3% and 4.9% on a monthly and annual basis, against a gain of 0.3% and 5.2% respectively in March.
At the same time, consumer spending, which accounts for more than two-thirds of economic activity in the United States, continued to advance, by 0.9% last month, after a jump of 1.4% (revised from 1, 1%) the previous month.
These data fuel the prospect of less drastic monetary tightening than initially anticipated.
In the euro zone, the President of the European Central Bank, Christine Lagarde, also spoke out in favor of a gradual increase in the cost of credit while the German inflation figures will be published on Monday.
A sign of renewed optimism in the markets, the index measuring volatility fell for the third consecutive session, to 25.9 points, in the United States, and in Europe, it ended down 7% at 23.8 points.
VALUES IN EUROPE
On the pan-European Stoxx 600, the positive trend was mainly driven by the consumer discretionary sector (+2.7%), high technologies (+2.2%) and industry (+1.8%). while the utilities (-0.8%) and energy (-0.2%) compartment posted the two largest declines.
Luxury stocks such as Kering (+4.5%), LVMH (+3.8%), Hermès (+4.4%) and Richemont (+9.5%) were particularly sought after.
In business news, Maisons du Monde plunged 26.9% due to the group lowering its annual forecast amid rising costs.
JCDecaux (-0.7%) and Unibail-Rodamco-Westfield (-2.7%) were penalized by recommendation downgrades from JP Morgan and Goldman Sachs respectively.
AT WALL STREET
At the close in Europe, the Dow Jones advanced 0.98%, the Standard & Poor’s 500 1.64% and the Nasdaq 2.4%.
All the main sectors of the S&P are evolving in the green, the compartment of new technologies (+2.6%) and that of consumption (+2.2%) posting among the best performances.
Dell soared 11% on quarterly forecasts above expectations, while cosmetics distributor Ulta Beauty jumped 9.1%, buoyed by its strong first-quarter results.
On the downside, the ready-to-wear chains GAP and American Eagle Outfitters fell about 5% in reaction to a lowering of their annual forecasts.
CHANGES
The index measuring the fluctuations of the dollar against a basket of reference currencies is almost unchanged (+0.04%) and is heading for its biggest weekly drop (-1.3% at this stage) in almost four months due to the downward revision by expectations of rate hikes in the United States.
The euro, down 0.12% to 1.0710 dollars, rose during the session to 1.0765, its highest level since April 25.
RATE
Bond yields are falling again on the prospect of easing fears of a rapid rise in interest rates.
The ten-year German Bund fell about three basis points to 0.961%, as several European Central Bank officials recently ruled out a half-point rise in the institution’s rates in July.
The yield on US Treasury bonds of the same maturity dropped two points to 2.7378% after briefly rising following the publication of statistics on household income and expenditure in the United States.
OIL
Oil prices vary little on Friday but should post a gain over the whole week linked to fears of a tightening of supply, the prospect of an increase in demand as the summer season approaches and of a possible European embargo on Russian hydrocarbons.[nL5N2XJ2W2[nL5N2XJ2W2
Brent rose 0.38% to 117.85 dollars a barrel and American light crude (West Texas Intermediate, WTI) nibbled 0.06% to 114.11 dollars.
TO BE FOLLOWED ON MONDAY:
Markets will remain closed on Monday in the United States due to Memorial Day, while in Europe the first estimate of German inflation for May will be published at 12:00 GMT.
(Written by Claude Chendjou, edited by Sophie Louet)
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