by Diana Mandia
(Reuters) – European stocks ended higher on Tuesday, reassured by US inflation figures despite a context of high volatility after the bankruptcy of three regional US banks in recent days.
In Paris, the CAC 40 gained 1.86% to 7,141.57 points. The British Footsie 1.17% and the German Dax 1.83%.
The EuroStoxx 50 index climbed 1.9%, the FTSEurofirst 300 1.43% and the Stoxx 600 1.45%.
The consumer price index (CPI) in the United States, published on Tuesday by the Department of Labor, stood at 0.4% last month and posted a slowdown to 6.0% over one year, in line with estimates from economists polled by Reuters, supporting expectations of a limited rate hike by the Federal Reserve (Fed) next week.
Markets, still reeling from the collapse of three US banks – SVB, Signature Bank and Silvergate – in less than a week, also lowered their estimates for the European Central Bank’s (ECB) monetary policy. , a few days before its meeting on Thursday.
Investors expect a lull in central bank monetary tightening, starting with the US Federal Reserve (Fed) meeting next week. In the euro zone, investors will learn on Thursday of Frankfurt’s decision on the matter.
According to Deutsche Bank, the ECB now looks more likely to raise interest rates by 25 basis points on Thursday, less than the 50 basis point hike previously expected.
“Regardless of the consensus that the bankruptcy of SVB is unlikely to trigger a systemic crisis, markets and policymakers are already trying to figure out where the next blow could come from,” warns Michael Leister, head of rates strategy at Commerzbank. .
Moody’s on Tuesday lowered its outlook on the U.S. banking system from “stable” to “negative”, citing heightened risks to the sector after the SVB meltdown fueled contagion fears.
THE INDICATORS OF THE DAY
Against the backdrop of a possible easing of monetary tightening, Britain’s Office for National Statistics (ONS) said on Tuesday that wage growth in Britain had slowed in the three months to January. Wages thus increased by 6.5% on an annual basis compared to an increase of 6.7% during the three months ending in December.
Consumer prices remain high, however, and in Spain fresh food prices rose 16.6% year on year in February, the national statistics institute INE said on Tuesday.
VALUES
In Europe, the banking sector (+2.45%) ended up after two sharp declines, BNP Paribas and Société Générale gaining 3.08% and 2.25% respectively.
Credit Suisse, which fell to a historic low on Monday, dropped 0.75% on Tuesday, the publication of its annual report showing a stabilization in outflows of funds but not a reversal as well as “significant weaknesses” in its internal controls.
Italian insurer Generali rose 3.6% after posting its best operating profit in 2022 and increasing its dividend.
Elsewhere in Europe, Volkswagen, which on Tuesday announced plans to invest 180 billion euros over the next five years, fell 1.5% as analysts at Jefferies pointed to weak fourth-quarter results for the automotive group during presentation of its strategic plan.
AT WALL STREET
At the time of the close in Europe, the New York Stock Exchange was trading in the green, with the Dow Jones taking 0.95%, the Standard & Poor’s 500 1.56% and the Nasdaq Composite 2.11%
Meta, which will cut 10,000 jobs as part of a second round of layoffs, rose 6.2% at the time of the European close.
Boeing climbed 3.8% after two Saudi airlines announced plans to order a total of 78 of its 787 Dreamliner, the fifth-largest commercial order by value in its history.
CHANGES
The dollar edged higher on Tuesday as the forex market tried to gauge the Fed’s next move after the SVB collapse.
The “dollar index”, which measures the variations of the greenback against a basket of currencies, is up 0.15% while the euro fell 0.11% to 1.0719 dollars.
RATE
Bond yields rose on Tuesday as investors believe the recent revision of the European Central Bank’s rate-tightening path amid concerns over the SVB may have gone too far. “We continue to believe that we are not facing systemic risks. Markets have probably gone too far in reassessing the path of monetary tightening,” said Massimiliano Maxia, senior fixed income specialist at Allianz Global Investors. The yield on ten-year US Treasuries rose 15 basis points to 3.6663%.
OIL
Oil prices fell Tuesday to their lowest level in five weeks, impacted by fears of a financial crisis that could reduce demand.
Brent thus fell by 1.52% to 79.54 dollars a barrel and American light crude (West Texas Intermediate, WTI) by 1.68% to 73.54 dollars.
TO BE FOLLOWED ON WEDNESDAY:
Investors will follow Wednesday the publication of producer prices in the United States and the final figures on inflation in France in February.
In London, British Finance Minister Jeremy Hunt is due to present the government’s budget.
(Editing by Kate Entringer)
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