by Diana Mandia
(Reuters) – European stock markets ended higher on Wednesday, driven by technology stocks after good results from SAP and ASML, as well as by the measures announced in China to support growth in the world’s second largest economy.
In Paris, the CAC 40 ended up 0.91% at 7,455.64 points. The British Footsie gained 0.56% and the German Dax 1.58%.
The EuroStoxx 50 index for its part gained 2.17%, the FTSEurofirst 300 1.18% and the Stoxx 600 1.15%.
The release of better-than-expected results for a number of technology companies, including ASML, a major supplier to semiconductor makers, and German software group SAP, supported European markets on Wednesday and helped technology stocks to reach their highest level in two years.
Investors were also reassured by the Chinese central bank’s announcement of a reduction in bank reserve requirements from February 5, as Beijing continues its efforts to stimulate activity in the world’s second-largest economy.
Market optimism comes amid heightened expectations ahead of the European Central Bank’s (ECB) first monetary policy meeting of 2004, scheduled for Thursday. While the Frankfurt-based institution is expected to keep rates at their current level, investors will be paying close attention to any comments on the prospects for monetary policy easing.
Traders are forecasting up to 130 basis points of interest rate cuts this year.
“There’s a lot of optimism in the air – positive momentum coming from last night’s U.S. close,” said Michael Hewson, chief analyst at CMC Markets, referring to the U.S.’s third consecutive record close. S&P 500 Tuesday.
VALUES
ASML gained 9.7% on Wednesday and dragged the tech sector in its wake, with an increase of 4.8%, leading the Stoxx 600 sectors.
SAP, which unveiled a restructuring program of two billion euros for 2024 on Tuesday, ended with an increase of more than 7%.
In Paris, Alstom lost 5.4% after reporting lower-than-expected revenue for its third quarter.
Luxury groups, very exposed to China, notably LVMH and Kering, posted increases of 1.9% and 1.3%, while the basic resources index advanced 2%, all supported by the measures. economic recovery announced by Beijing.
A WALL STREET
At closing time in Europe, the Dow Jones gained 0.31%, the Standard & Poor’s 500 0.62% and the Nasdaq Composite 1.06%, thus consolidating the progression of recent sessions.
Among the groups that stand out, Netflix advances 11.5% after exceeding expectations in terms of subscriber growth.
TODAY’S INDICATORS
Preliminary PMIs for January showed that economic activity continued to contract in France and Germany, but the slowdown in the euro zone had eased.
The Ifo institute on Wednesday again revised downwards its growth forecast for Germany in 2024 and now expects Europe’s largest economy to record an increase in gross domestic product of 0.7% in 2024, instead of 0.9% previously forecast in mid-December.
Across the Atlantic, business activity accelerated in January, according to preliminary results from the S&P Global purchasing managers surveys, with the “flash” composite PMI rising to 52.3 in January, the highest level highest since last June.
CHANGES
The dollar lost 0.5% against a basket of reference currencies, while the euro gained 0.44% to 1.0899 dollars after the publication of the PMI indicators.
The greenback is nevertheless up around 1.7% in January and is on track to achieve its best monthly performance since September, with operators revising downwards their forecasts for a rapid reduction in interest rates of the Fed.
RATE
Eurozone bond yields fell on Wednesday as the market digested the Eurozone PMI, which showed activity contracted again in January.
The German ten-year yield lost almost 2 points to 2.331%, and the two-year yield lost almost 1 bp to 2.706%.
US rates are rather stable, with investors awaiting the release of US gross domestic product (GDP) on Thursday and the Fed meeting next week. However, they reduced their decline after the publication of the S&P Global survey showing an acceleration in American business activity in January.
The ten-year rate thus stands at 4.1511%, and the two-year rate at 4.3675%.
OIL
Oil prices edged higher as a larger-than-expected drop in U.S. crude reserves, economic stimulus measures in China and geopolitical tensions helped counter concerns about demand.
Brent rose 1.18% to $80.49 per barrel, with American light crude (West Texas Intermediate, WTI) increasing 1.69% to $75.63 CLc1.
(Writing by Diana Mandiá, editing by Zhifan Liu)
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