by Laetitia Volga
PARIS (Reuters) – European stock markets ended in scattered order on Wednesday after several corporate results and renewed concerns about inflation, which resulted in a rise in bond yields.
In Paris, the CAC 40 gained 0.21% to 7,549.44 points. The British Footsie fell 0.13% and the German Dax edged up 0.08%.
The EuroStoxx 50 index lost 0.01%, the FTSEurofirst 300 0.05% and the Stoxx 600 0.1%.
European government bond yields rose to their highest level in more than a month in the session as investors anticipated further interest rate hikes in the euro zone and the UK.
The European Central Bank’s chief economist spoke out on Tuesday in favor of a rate hike in May, but said the extent of the hike would depend on forthcoming data.
Although Eurostat announced in the morning that the rise in consumer prices had indeed slowed down to 6.9% last month in the euro zone, it also confirmed that underlying inflation had, on the other hand, accelerated, which should keep the pressure on the ECB.
The same goes for the Bank of England (BoE) while the United Kingdom is the only country in Western Europe to always record double-digit inflation.
Consequently, Bank of America, BNP Paribas or even RBC Capital Markets expect the BoE to raise its rate by a quarter of a point in May, rather than leaving it unchanged.
With regard to the US Federal Reserve, the markets are also anticipating a quarter-point rise on May 3 and are more reluctant to ‘price’ a drop during the year.
WALL STREET
At the time of the close in Europe, Wall Street was down around 0.2%.
Netflix fell 3.32% after reporting disappointing current quarter forecasts and Tesla shares fell 1.86% as a further drop in the prices of some of the automaker’s electric vehicles in the United States raised concerns over its margins.
Last major bank to have published its results for the first quarter, Morgan Stanley gave up 0.68% in reaction to the fall in its profit, hampered by the difficulties of its investment banking division.
VALUES
Worldline gained 0.92% after the announcement of exclusive negotiations with Crédit Agricole to create a joint venture in payment services.
OVHcloud fell by 8.95%, after the deterioration of its forecast for turnover and adjusted Ebitda margin for 2023.
ASML, a major maker of semiconductor equipment, fell 3.69% on concerns over slowing demand. In its wake, STMicroelectronics lost 2.10% and Infineon 2.55%.
The European technology index lost 1.94%, a movement which is also explained by the volatility in the bond market.
RATE
Eurozone, UK and US government bond yields hit their highest level in around a month as investors expected further rate hikes from the ECB, the BoE and the Fed.
The ten-year German took more than three basis points to 2.504% and its American equivalent gained five points to 3.6368%.
The yield on UK Gilt of the same maturity jumped more than ten basis points to end at over 3.85% for the first time since early March.
CHANGES
With the rise in sovereign yields, the dollar gained 0.2% against a basket of currencies. The euro fell slightly against the greenback and against the pound sterling, the latter benefiting from the increasingly clear prospect of a rise in the British key rate after the slowdown less than expected by the CPI index.
OIL
Oil prices are in the red, with fears that further US rate hikes will dampen the economy and crude consumption outweighing a sharper-than-expected drop in US inventories.
Brent lost 1.56% to 83.45 dollars a barrel and American light crude (West Texas Intermediate, WTI) 1.77% to 79.43 dollars.
(Laetitia Volga, edited by Matthieu Protard)
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