by Augustin Turpin
(Reuters) – European stock markets ended lower on Monday, while Wall Street was in disarray at the end of the morning in New York, in a context of caution pending the publication this week of a series of key economic data for the trajectory of rates, including inflation in the euro zone on Thursday.
The session was marked by the hearing of the President of the European Central Bank (ECB) Christine Lagarde in the European Parliament, during which she declared that, if inflationary pressures in the euro zone weaken as expected, growth wages remain high and the outlook very uncertain.
“Now is not the time to start declaring victory,” Christine Lagarde said in a speech to the European Parliament’s Economic and Monetary Affairs Committee.
“We must remain attentive to the different forces affecting inflation and firmly focused on our mandate of price stability.”
Christine Lagarde said she expected inflationary pressures to continue to ease while warning that overall price growth could accelerate in the coming months and that the medium-term outlook was surrounded by “considerable uncertainty.”
At the close in Europe, the Dow Jones fell 0.27%, the Standard & Poor’s-500 lost 0.1% and the Nasdaq rose 0.15%.
In Paris, the CAC 40 ended down 0.37% at 7,265.49 points. The British Footsie fell by 0.37% and the German Dax by 0.39%.
The EuroStoxx 50 index lost 0.33%, the FTSEurofirst 300 lost 0.3% and the Stoxx 600 0.28%.
Markets are hesitant before a week full of crucial data for the trajectory of rates and economies in the euro zone and the United States.
The PCE consumer price index, the inflation measure favored by the Federal Reserve, is due Thursday and should see its weakest increase since mid-2021, according to market expectations.
Investors will also follow the eight speeches by members of the Fed’s board of governors, including that of Jerome Powell, the president of the institution, expected on Friday.
Monetary policymakers are expected to reaffirm that rates will remain restrictive for longer than markets expect, while an upward surprise in inflation could also impact investor projections, with some betting that the first rate cut will take place in March.
The next OPEC+ meeting, also on Thursday, could also influence the inflation outlook if the organization decides to reduce its crude production again.
VALUES IN EUROPE
The satellite company Eutelsat lost 3.57% after Goldman Sachs lowered its recommendation to “neutral”, while the collective catering group Elior ELIOR.PA gained 1.42% thanks to the increase in the recommendation from Deutsche Bank to “buy”.
The ADP stock (formerly Aéroports de Paris) fell 1.31%, with Jefferies analysts citing the announcement by the French Minister of Transport, Clément Beaune, of a reform of airport regulation which puts an end to the ” single fund”.
French drugmaker Valneva advanced 0.42% after saying the marketing authorization application for its chikungunya vaccine candidate was accepted by the European Medicines Agency (EMA).
Sanofi for its part took 0.29% while the group plans to request authorization for the American market of its best-selling anti-inflammatory, Dupixent, for the treatment of “smoker’s lung”, also known as COPD, after a second large trial showed significant improvements in patients.
RATE
Bond yields are falling in the euro zone as investors await inflation data due later this week, which could influence expectations for interest rate cuts in 2024.
“It’s difficult to attribute today’s movement to a concrete event – it’s basically tracing the movement of Thanksgiving while the United States was on holiday,” said Benjamin Schroeder, an analyst at ING.
The yield on the German ten-year fell around 9 basis points (bps) to 2.56% after reaching a 10-day high on Friday.
The American bond markets are falling, with the ten-year bond market losing more than 5 bps to 4.47%, and the two-year bond market more than 4 bps to 4.9%.
CHANGES
The dollar is stable against a basket of benchmark currencies, on course for its biggest monthly decline in a year, in response to expectations that the Federal Reserve may begin cutting interest rates in the first half of next year.
The euro lost 0.02% to 1.0937 dollars.
OIL
Oil prices are falling, with Brent crude nearing $80 a barrel, as investors await this week’s OPEC+ meeting which is expected to see supply restrictions in place until 2024.
Market sentiment remains negative given internal OPEC+ conflict over production quotas, according to ING analysts, although they expect Saudi Arabia to roll over its additional voluntary cut of 1 million of barrels per day (bpd) over the next year, and that Russia extends its own reductions.
Brent dropped 0.53% to $80.15 per barrel, with light American crude (West Texas Intermediate, WTI) losing 0.44% to $75.21.
TO BE CONTINUED ON TUESDAY:
(Some data may have a slight lag)
(Written by Augustin Turpin)
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