(Reuters) – European stocks ended in disarray on Friday, after Federal Reserve (Fed) Chairman Jerome Powell’s comments on the state of the U.S. economy and before Christine Lagarde, President of the Bank European Central Bank (ECB), does not speak in turn on activity in the euro zone.
In Paris, the CAC 40 nibbled 0.21% to 7,229.60 points, while the German Dax and the British Footsie were stable.
The EuroStoxx 50 index, the FTSEurofirst 300 and the Stoxx 600 stalled.
Over one week, the CAC 40 rose by 0.91% and the Stoxx 600 by 0.71%.
The opening of the annual Jackson Hole symposium was eagerly awaited by the markets, with Jerome Powell’s inaugural speech focusing on the state of the US economy resisting rate hikes.
While the governor reiterated the message of recent monetary policy meetings – data dependence, persistent inflation and overly tight labor markets – markets nonetheless heeded his warnings that the Fed might need to raise rates further.
“We stand ready to raise rates further if necessary, and we intend to keep our policy restrictive until we are confident that inflation is sustainably close to our target,” Jerome said. Powell.
These comments add to the worries of the markets, which are beginning to anticipate that interest rates could be higher than expected.
“Central bankers are clearly occupying the markets’ attention, as the idea of ’high rates for a long time’ is challenged by the competing idea of ’higher rates for a long time,’ notes Florian Ielpo, head of research at Lombard Odier AM.
“As a result, real rates in the United States have found a new anchor, dropping from 1.4% to 1.8%, representing a significant change and increasing pressure on the economy.”
VALUES
Watches of Switzerland ended down 20.91%, bottom of the Stoxx 600, as Rolex’s takeover of retailer Bucherer raised questions about Watches’ prospects.
JCDecaux gained 3.19%, finishing top of the SBF120 after Deutsche Bank raised its recommendation to “buy”, citing growth opportunities presented by the Paris Olympics.
AT WALL STREET
Like the European markets, caution is winning over Wall Street, which is hesitating after Jerome Powell’s comments.
At the time of closing in Europe, trading on the New York Stock Exchange indicated an increase of 0.42% for the Dow Jones, against 0.20% for the Standard & Poor’s 500 and a decline of 0.26%. for the Nasdaq Composite, made up of rate-sensitive growth stocks.
RATE
US yields rose after the symposium opened as investors feared monetary policy could become tighter, dragging European yields with them.
The ten-year Treasury yield gained 1 basis point to 4.2453%, while the two-year gained 5 basis points to 5.0670%.
The ten-year German yield rose 3.5 basis points to 2.5570%, compared to a rise of 6.2 basis points to 3.0310% for the two-year.
CHANGES
The outlook for higher rates is supporting the dollar, which is strengthening after Jerome Powell’s comments in Jackson Hole.
The dollar rose 0.38% against a basket of benchmark currencies, the euro fell 0.24% to 1.0783 dollars. The pound fell 0.25% to $1.2575.
OIL
Crude rose despite warnings from Powell that US growth may need to slow in order to bring inflation under control.
Brent rose 1.02% to 84.20 dollars a barrel and US light crude (West Texas Intermediate, WTI) advanced 0.92% to 79.78 dollars.
(Writing by Corentin Chapron, editing by Kate Entringer)
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