by Claude Chendjou
PARIS (Reuters) – European stock markets ended lower on Friday amid tensions in the bond sector due to doubts about the pace of expected cuts in key rates, while Wall Street rebounded mid-session after the report on the American employment which shows a slowdown in wage growth despite a still dynamic labor market.
In Paris, the CAC 40 ended down 1.11% at 8,061.31 points. The British Footsie lost 0.81% and the German Dax lost 1.3%.
The EuroStoxx 50 index fell by 1.1%, the FTSEurofirst 300 by 0.82% and the Stoxx 600 by 0.84%.
Over the week as a whole, the CAC 40 lost 1.76% and the Stoxx 600 1.19%, in a context of increased volatility and uncertainties over geopolitics and interest rates.
A sign of nervousness in Europe, the index measuring volatility on the Eurostoxx 50 soared 17.78%, to 16.11 points.
The bond market is particularly suffering from the comments of Neel Kashkari, member of the American Federal Reserve (Fed), who declared on Thursday that if inflation continued to stagnate, a reduction in key rates in the United States would not be necessary this year. Some analysts believe that the European Central Bank (ECB) will not be able to start lowering rates before the Fed.
The markets are currently counting with a probability of only 56% on a first monetary easing in the United States in June, compared to a probability of 60% before the publication of the American employment report.
This report identified 303,000 non-agricultural jobs last month after 270,000 in February and a consensus of only 200,000, a sign of the resilience of the American economy despite the massive increase in interest rates since March 2022. Wage growth however, slowed down at an annual rate to 4.1%, after +4.3% in February.
“The key element in the data (…) is the average hourly wage, which has now fallen to 4.1% over one year, the lowest level since June 2021,” underlined David Waddell, strategist at Waddell & Associates.
“This is the reason why the market can digest (this report),” he added.
A WALL STREET
At the close in Europe, the Dow Jones rose by 0.92%, the Standard & Poor’s 500 by 1.24% and the Nasdaq by 1.49% the day after a session in sharp decline.
Ten of the eleven main sectors of the S&P-500 are in the green, with the so-called non-essential consumption index (+1.86%) recording the best gains.
“Tech” giants like Nvidia, Meta Platforms and Amazon rebound from 2.95% to 3.36%.
Tesla, on the other hand, fell 2.83%, with three sources reporting to Reuters that the automaker had abandoned its affordable car project.
VALUES IN EUROPE
In Paris, Bureau Veritas ended in the red (-0.71%) after the announcement of a sale of 9% of the group’s capital by Wendel (+0.81%).
In Zurich, Holcim fell 0.45% after the Swiss construction materials group announced its intention to buy Tensolite.
SoftwareOne fell 0.95%, as proxy (proxy advisory) companies lent their support to the board of directors against the wishes of the founders of the IT group who wanted its replacement following the rejection last year of an offer to purchase Bain.
EXCHANGES The dollar is stable against a basket of reference currencies.
The euro stands at $1.0842 (+0.05%), while the pound sterling trades at $1.2633 (-0.06%).
The yen is trading at 151.52 per dollar while a Japanese official, Tatsuo Yamazaki, warned on Thursday that intervention by the authorities would take place if the threshold of 152 was crossed.
RATE
The yield on ten-year US Treasury bonds rose almost six basis points, to 4.3635%.
That of the German Bund of the same maturity ended with a gain of 4.2 points, at 2.396%. Over the week as a whole, it gained more than 11 points while the monetary markets are now only forecasting a drop of 86 basis points in ECB rates this year compared to 89 points before the American employment report.
OIL
Oil prices, which are expected to gain more than 4% over the week as a whole, are heading towards a second consecutive weekly gain, in a context of geopolitical tensions in Europe and the Middle East, for fear of a drop in the supply and signs of increasing demand.
Brent rose 0.98% to $91.54 per barrel and American light crude (West Texas Intermediate, WTI) rose 0.82% to $87.30.
TO BE CONTINUED ON MONDAY:
(Written by Claude Chendjou, edited by Bertrand Boucey)
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