PARIS (Reuters) – European stock markets ended higher on Tuesday, supported by a moderate return of risk appetite, but gains were capped by investors’ wait-and-see attitude and geopolitical uncertainty.
In Paris, the CAC 40 gained 0.63% to 6,893.65 points, while the German Dax gained 0.54% and the British Footsie 0.2%.
The EuroStoxx 50 index ended the session with an increase of 0.58%, compared to 0.39% for the FTSEurofirst 300 and 0.44% for the Stoxx 600.
Risky assets recovered after declining sharply last week, with the Stoxx 600 index having fallen over the five sessions preceding Tuesday’s session.
The decline in oil prices and the erosion of long-term yields in Europe are helping to support equities.
Geopolitical tensions and record high sovereign rates have reduced risk appetite while pushing valuations down to reflect rising bond yields.
Investors are positioning themselves for restrictive rates for longer than expected, because the resistance of the American economy to the unprecedented tightening of the Federal Reserve’s monetary policy raises fears of a persistence, or even a resumption, of inflationary pressures.
As such, the numerous publications of results and indicators expected this week could decide the direction of the stock markets in the coming weeks. Four of the “magnificent seven”, seven companies whose performance contributed significantly to the rise in American stock markets in 2023, are publishing their results this week – those of Microsoft and Alphabet are expected Tuesday after the close.
In terms of indicators, GDP in the third quarter and inflation in the United States are expected on Thursday and Friday, and any upward surprise, which would indicate undue resistance in activity, would weigh on prices.
The meeting of the European Central Bank on Thursday, that of the Fed on November 1, and the Bank of England on November 2 also encourage caution.
VALUES
Hermès reported on Tuesday organic growth in its turnover slowing in the third quarter but above expectations, with an increase in sales at constant exchange rates of 15.6%, to 3.13 billion euros. . The stock gained 2.78% and led luxury stocks in Paris to rise: LVMH gained 1.73% and Kering 0.98%.
Michelin lost 0.97% before the publication of its results, expected after the close.
Virbac soared 11.24%, leading the SBF120, after the French veterinary pharmaceutical company raised its forecasts for the current year and announced increased turnover for the third quarter.
Logitech jumped 10.57% after the IT equipment maker reported an improvement in second-quarter revenue and raised its forecast for the full year 2023/24. The group now expects revenue of $4 billion to $4.15 billion for the year, compared to a previous forecast of $3.8 billion to $4 billion.
Barclays fell 6.53%, among the worst performers on the Stoxx 600, after suggesting on Tuesday that it would undertake significant cost cuts later this year due to margin pressures and despite a pre-tax profit for the third quarter slightly above expectations. The banking sector in Europe fell by 0.97%
A WALL STREET
Wall Street is up at closing time in Europe, but remains focused on the publication of results from Microsoft and Alphabet after the close.
At closing time in Europe, trading on the New York Stock Exchange indicated an increase of 0.6% for the Dow Jones, compared to 0.58% for the Standard & Poor’s 500 and 0.55% for the Nasdaq. Composite.
RATE
Yields in Europe are declining, with investors positioning themselves after PMI indicators confirming the slowdown in activity in the Eurozone.
At the close of the European interest rate markets, the ten-year Treasury yield rose by 3.2 bp to 4.8695%, while the two-year rate strengthened by 5.5 bp to 5.1162%.
The yield on the German ten-year fell 3.4 bps to 2.832%, while that of the two-year rate fell by 2.8 bps to 3.157%.
CHANGES
The dollar jumped, supported by American manufacturing PMI indicators which emerged from five months of contraction in October, and a slight increase in services PMI indicators. Conversely, the currencies of the Old Continent are declining after contracting PMI indicators.
The dollar rose 0.71% against a basket of reference currencies, while the euro lost 0.74% to 1.0589 dollars. The pound sterling fell 0.69% to $1.2163.
OIL
Crude is in sharp decline, after contracting PMI indicators in the euro zone, which raise fears of a drop in demand. In addition, the International Energy Agency published a report on Tuesday indicating a decline in global oil demand from 2030.
Brent fell 2.07% to $87.97 per barrel, with American light crude (West Texas Intermediate, WTI) falling 2.29% to $83.53.
(Written by Corentin Chappron, edited by Kate Entringer)
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