by Claude Chendjou
PARIS (Reuters) – European stock markets ended higher on Wednesday in the wake of Wall Street, which was in the green mid-session, as equity markets in the United States were supported by the publication of inflation figures globally in line with expectations and the remarks deemed reassuring the day before by Jerome Powell, the president of the American Federal Reserve.
In Paris, the CAC 40 ended with a gain of 0.75% to 7,237.19 points. The British Footsie gained 0.71% and the German Dax 0.43%.
The EuroStoxx 50 index advanced 0.78%, the FTSEurofirst 300 0.69% and the Stoxx 600 0.64%.
Statistics released on Wednesday by the US Department of Labor showed that consumer price inflation in the United States decelerated in December to 0.5% from November, although year on year it represents the strongest increase in 40 years (+7.0%).
These figures are not a surprise, however, since economists polled by Reuters on average forecast an increase of 0.4% from one month to another and an increase of 7.0% on an annual basis.
On Tuesday, the statements to Congress by Jerome Powell, the president of the American Federal Reserve, considered reassuring on the pace of the rise in interest rates, had already enabled the Wall Street indices to end in the green while the European markets had closed lower.
The renewed investor confidence is also fueled by weaker than expected producer price data from China, which could support further easing of monetary policy from Beijing.
In Europe, on the indicator side, industrial production in November nevertheless posted an unexpected decline of 1.5% over one year.
VALUES IN EUROPE
In Europe, the basic resources (+3.11%) and energy (+2.3%) compartments recorded the strongest gains on the Stoxx 600, thanks to expectations of new support measures for the Chinese economy and an increase in global demand for crude. In Paris, TotalEnergies advanced 3.06%, ArcelorMittal 6.37%, while in London BP gained 3.20%, BHP Group 4.40%, AngloAmerican 3.87% and Rio Tinto 2.84 %
The European new technologies sector (+1.54%) for its part benefited from the rise of the Nasdaq, whose securities had been sold off massively in previous sessions. Capgemini gained 1.29%.
On the downside, the health sector (-0.54%) was penalized by the ebb of fears about the Omicron variant of the coronavirus. In France, Olivier Véran, the Minister of Health, mentioned a possible slowdown in the circulation of this strain.
EDF, in decline for a good part of the session, finished almost stable despite the announcement of a new delay for the Flamanville EPR reactor, the cost of which is now estimated at 12.7 billion euros.
In corporate results, OVHcloud ended with a gain of 4.55%, as Europe’s leading provider of cloud computing services confirmed its annual targets.
Rexel, a group specializing in products and services for the energy sector, for its part jumped 10.31%, signing one of the best performances of the Stoxx 600, thanks to results exceeding its objectives for the year 2021.
In contrast, Dutch health-tech group Philips plunged 15.21% after a profit warning.
Also in Amsterdam, the European number one in the delivery of meals Just Eat Takeaway.com was awarded 3.91% thanks to a 14% growth in its order intake in the fourth quarter and confirmation of its objectives this year.
In London, the British distributor Sainsbury’s on Wednesday raised its annual profit forecast, allowing the title to close with a gain of 3.11%.
AT WALL STREET
At the time of closing in Europe, the Dow Jones took 0.16%, the Standard & Poor’s 500 0.31% and the Nasdaq 0.30%.
On the equity markets, the technological compartment, which is particularly sensitive to changes in interest rates, progressed further, by 0.57%, in the absence of any indication from Jerome Powell on the possibility of four increases in interest rates. Fed rate this year.
Microsoft and Tesla win 1.4% and 2.6%.
Apple gained 0.6% as Goldman Sachs said iPhone delivery times suggested supply now largely met demand after supply difficulties last year.
On the downside, Biogen (-8.1%) suffered both from a lowering of its recommendation and from the limited scope of its treatment for Alzheimer’s disease, the American health agency CMS having announced that the Medicare program will not would pay for treatments against this pathology only for patients registered as part of a clinical trial.
In mergers and acquisitions, the satellite television operator Dish Network gains 3.8% in discussions with its competitor DirecTV, a subsidiary of AT&T (+0.2%), according to an article in New York Post.
On the sector level, all the major indices of the S&P-500 are moving in the green, with the exception of health, down 0.41%.
CHANGES
On the foreign exchange market, the dollar lost 0.54% against a basket of benchmark currencies after Jerome Powell’s statements and the unsurprising inflation figures.
The euro advanced 0.52% to 1.1424, its highest level since the start of the year.
RATE
Ten-year US Treasury yield reacts to US inflation data, dropping almost a basis point to 1.737% after hitting Monday’s peak at 1.808%, on expectation of an acceleration in monetary tightening in the USA.
The ten-year German Bund rate, the benchmark for the euro zone, contracted by 2.4 basis points to -0.056%, while its French equivalent of the same maturity ended down 1.8 points to 0.276. %.
“The inflation figure is in itself impressive (…) but it was expected. The market reacted immediately. There were therefore probably expectations for it to come out even higher”, comments Luca Cazzulani, strategist at UniCredit.
OIL
The oil market continues to rise and is now at its highest for two months, supported both by the current tensions on supply and by the ebb of fears linked to the Omicron variant. Weekly figures from the Energy Information Administration (EIA) on inventories in the United States further showed that they had fallen to a low since October 2018.
The barrel of Brent took 1.15% to 84.70 dollars and that of American light crude (West Texas Intermediate, WTI) 1.61% to 82.53 dollars.
(Report Claude Chendjou, edited by Jean-Michel Bélot)
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