(Reuters) – European stock markets ended higher on Thursday, with the exception of the German Dax, although the main indices reduced their gains after the European Central Bank (ECB), unlike the American Federal Reserve the day before, pushed back expectations of an imminent drop in interest rates.
In Paris, the CAC 40 ended with a gain of 0.59% to 7,575.85 points. The British Footsie gained 1.33% while the German Dax lost 0.08%.
The EuroStoxx 50 index gained 0.27%, the FTSEurofirst 300 0.68% and the Stoxx 600, after reaching its highest level in almost two years during the session, gained 0.93%.
The market mood changed during the day with the ECB meeting, which adopted a less dovish tone than the Fed on its monetary policy, while the US central bank signaled on Wednesday that it was nearing the end , otherwise had already completed its campaign to increase rates and they should decrease next year.
Unsurprisingly, the ECB chose on Thursday to maintain its key rates at their current level, at 4.0%, after ten increases since July 2022 and a first pause in October. She once again pushed back against hopes of an imminent drop in borrowing costs, reaffirming that they would remain at record levels despite a downward revision to her inflation forecast.
The president of the institution, Christine Lagarde, even clarified that no rate cut had been discussed during the central bank meeting.
“Lagarde pushed back the deadline (…) Remarks such as ‘we haven’t discussed rate cuts at all’ are a pretty clear signal that there will be no such measures in the first quarter ( 2024)”, commented Carsten Brzeski, analyst at ING.
In this week marked by the decisions of central bankers, the Bank of England (BoE), which opted for a new pause, also gave no indication on the potential timetable for its rate cuts, emphasizing that They are expected to remain high for “an extended period”, while the Norwegian Central Bank even made a surprise increase.
The Swiss National Bank (SNB) for its part once again left its main key rate unchanged on Thursday, continuing the pause announced at its November meeting.
VALUES
European real estate soared by 5.67%, the best performance of the Stoxx 600 sectors, supported in particular by the Fed’s announcements the day before.
The German group Vonovia and the Swedish SBB took more than 7% and 15% respectively, and in Paris, Icade advanced by 5.7%, Nexity by 9.5% and Unibail Rodamco gained 5.5%.
In the rest of the sectors, Vivendi gained 9.9% after announcing that it was considering a split of its activities into three listed entities, while Air France-KLM climbed 8.9%, the airline having revised its increases its operating margin outlook for the period 2026-2028.
In Milan, the luxury group Brunello Cucinelli rose 6.8% after revising upwards its results forecast for the past year.
A WALL STREET
At closing time in Europe, the Dow Jones, which briefly crossed the historic level of 37,223 points on Thursday with hopes of an upcoming rate cut, gained 0.32%, the Standard & Poor’s 500 0.41 % and the Nasdaq Composite 0.32%.
TODAY’S INDICATORS
Economic indicators released Thursday point to a soft landing for the US economy, with retail sales in the United States recording an unexpected increase in November, while weekly jobless claims fell.
In France, INSEE lowered its growth forecast in 2023, now expecting an increase in gross domestic product (GDP) of 0.8% compared to 0.9% previously, while emphasizing that the country should escape a recession at the end of the year.
CHANGES
The dollar declines against the majority of currencies after the Fed meeting.
The greenback thus lost 1.01% against a basket of reference currencies, while the euro gained 1.13% to 1.0996 dollars.
The pound sterling increased by 1.2% to $1.2769.
RATE
Bond yields in the euro zone fell, while attenuating their decline, following the ECB meeting and the absence of a clear horizon on a reduction in borrowing costs.
The German ten-year yield lost more than 4 bps to 2.126%, and that of the two-year rate lost 9 bps to 2.564%. The yield on ten-year Italian bonds ended at 3.812%, down more than 12 bp. In the United Kingdom, the yield on ten-year gilts fell, under the effect of the BoE decision, with a loss of around 3 bps to 3.801%.
American bond markets fell amid hopes of an upcoming rate cut by the Fed. Ten-year US Treasuries lost 12 bps to 3.9058%, and two-year bonds fell around 14 bps to 4.3381%.
OIL
Oil prices rose sharply, supported by the Fed’s decision, which weakened the dollar, and by a larger than expected drop in oil stocks in the United States.
Brent rose 3.57% to $76.91 per barrel, with American light crude (West Texas Intermediate, WTI) increasing 3.77% to $72.09 CLc1.
TO BE CONTINUED FRIDAY:
(Some data may have a slight lag)
(Written by Diana Mandiá, edited by Jean Terzian)
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