by Claude Chendjou
PARIS (Reuters) – European stock markets ended in scattered order on Friday and Wall Street was also moving erratically mid-session the day after equity markets fell sharply on inflation fears and a rapid rise in rates interest rate, raising fears of the economy plunging into recession.
In Paris, the CAC 40 ended down 0.06% at 5,882.65 points. The British Footsie lost 0.41%. The German Dax resisted the decline of other places by gaining 0.67%.
The EuroStoxx 50 index, for its part, advanced by 0.31% and the Stoxx 600 by 0.09%, but the FTSEurofirst 300 fell by 0.05%.
Over the whole week, the Parisian index lost 4.92% and the pan-European Stoxx 600 4.60%.
The turn of the screw operated this week by the American, Swiss and British central banks in the face of galloping inflation has precipitated several indices into the “bear market” zone (bear market), i.e. a decline of more than 20% compared to the last point. high.
While the Bank of Japan, as expected, opted to leave interest rates unchanged on Friday, it stressed the need to monitor the economic impact of yen fluctuations.
In the euro zone, where money markets anticipate a 190 basis point rise in European Central Bank (ECB) rates by December, inflation was confirmed on Friday at 8.1% in May over one year, its highest historical level, according to figures published by Eurostat.
“Markets will not stabilize until there is a sense that the actions taken by the Fed and other central banks will succeed not only in containing inflation, but also in trying to avoid a global recession.” said Kenny Polcari, partner at Kace Capital.
A sign of volatility, the CBOE index in the United States remains well anchored above 30 points and its European equivalent ended at 30.8 points despite the attempted rebound in the equity markets.
VALUES
In Europe, the positive trend was driven mainly by the defensive compartment, real estate (+2.2%) and bargain purchases of high technologies (+1.3%), while the most notable declines were on the assets of raw materials (-2.7%) and energy (-4.03%), penalized by the decline in oil prices against a backdrop of fears about demand.
TotalEnergies and BP lost 5.06% and 6.1% respectively.
In corporate news, ABN Amro jumped 5.6% after reports from Bloomberg that BNP Paribas (+0.4%) expressed interest in taking over the Dutch group. A source confirmed to Reuters that the French bank had contacted the Dutch government about the matter.
Finnish tire maker Nokian Tires rose 10.2% as it raised its full-year sales forecast. In its wake, Michelin took 2.1%.
The British group Tesco (+0.8%) was supported by the confirmation of its forecasts, while EssilorLuxottica (+3.8%) benefited from the announcement of the launch of a share buyback program.
AT WALL STREET
At the time of closing in Europe, the Dow Jones fell 0.47%, the Standard & Poor’s 500 0.24%, while the Nasdaq took 0.77%. The three indices are moving over the whole week towards a third consecutive weekly loss.
In values, the growth groups are supported by bargain purchases. Apple and Amazon gained 1.2% and 1.5% respectively, but Adobe lost 2.3% as its forecast was deemed disappointing.
Revlon soared 80.5% after information that the Indian conglomerate Reliance Industries is considering a takeover of the American cosmetics group, which filed for bankruptcy on Wednesday.
On the downside, the energy compartment, which is down nearly 15% this week, fell 5% on Friday and headed for poor sector performance.
THE INDICATORS OF THE DAY
Industrial production in the United States recorded a more marked slowdown in May than expected with an increase of only 0.2% after 1.4% in April.
RATE
Rates in Europe were volatile on Friday the day after Christine Lagarde’s remarks. According to sources, the President of the European Central Bank (ECB), said on Thursday that the anti-fragmentation mechanism being developed to avoid too large yield spreads between bonds in the bloc could be activated in the event of a breach of predetermined thresholds, without however specifying the level of these thresholds.
“Given the very low visibility of the short-term outlook in the markets, we expect elevated volatility to persist,” said Piet Christiansen, analyst at Danske Bank.
Alternating up and down, the ten-year German Bund yield ended down 2.7 basis points at 1.669%. Its French equivalent of the same maturity dropped 5.1 points to 2.211%.
In Italy, the decline was more marked with a decline of 18.3 points to 3.675%.
The yield spread between ten-year German bonds and Italian ones of the same maturity fell below 200 basis points, against more than 250 points at their highest on Thursday.
In the United States, the yield on ten-year Treasuries, also volatile, fell 7.4 points to 3.231% at the close of trading in Europe after rising to 3.292% during the session.
CHANGES
At foreign exchange, the index measuring the fluctuations of the dollar against a basket of reference currencies, rebounded by 1.23% and is heading towards a gain of around 0.75% over the week as a whole. Against the yen the greenback took Friday up 1.6% to 134.14 after the monetary policy decision without surprise from the Bank of Japan.
The euro, down 0.7%, is trading at 1.0473 dollars after rising to 1.0601 on Thursday.
OIL
Oil retreats sharply on fears of a recession and lower U.S. gasoline futures, with analysts saying soaring prices at the pump could discourage household demand, tariffs diesel prices hit a record high of $5.798 per gallon on Friday, while gasoline prices came in at $5.016 per gallon this week.
Brent fell 4.74% to 114.13 dollars a barrel and US light crude (West Texas Intermediate, WTI) 5.47% to 111.26 dollars.
For the week as a whole, Brent is heading for its first weekly loss in five weeks and WTI for its first in eight weeks.
(Written by Claude Chendjou, edited by Sophie Louet)
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