PARIS (Reuters) – European stock markets ended higher on Friday after encouraging comments from the governor of the European Central Bank, Christine Lagarde, and after the publication of a producer price index in the United States lower than expected .
In Paris, the CAC 40 gained 1.05% to 7,465.14 points, while the German Dax increased by 0.95% and the British Footsie by 0.64%.
The EuroStoxx 50 index ended the session with an increase of 0.76%, compared to 0.77% for the FTSEurofirst 300 and 0.77% for the Stoxx 600.
Over the week, the CAC 40 increased by 0.6% and the Stoxx 600 was stable.
Investors welcomed Christine Lagarde’s comments on France 2 on Thursday, the head of monetary policy having acknowledged that rates had probably reached their peak and that the hardest part had been done on inflation.
The more restrictive comments from the ECB’s chief economist, Philip Lane, were not enough to temper the optimism of the markets which are betting on a reduction in the ECB’s key rate of 150 basis points in 2024.
The publication of a producer price indicator rising less than expected year-on-year also pushed investors to bet on an imminent rate cut by the Federal Reserve.
Following the publication of the indicator, money markets raised the probability of a Fed rate cut in March to 86%, compared to an estimate of 70% earlier in the day.
The sharp decline in sovereign yields also benefited risky assets.
“Despite the rise in inflation, real rates fell as the Fed funds monetary scenario again included 6 cuts,” summarizes Florian Ielpo, head of macro research at Lombard Odier IM.
“Lower rates, controlled inflation and growth dynamics that are improving again: it is becoming increasingly difficult not to expect a general rise in the market in the weeks to come, outperforming rates of ‘interest still high.’
RATE
Yields closed sharply lower as investors believe rate cuts are now imminent.
At the close of the European interest rate markets, the ten-year Treasury yield lost 3.2 bp to 3.9427%, compared to a fall of 12.2 bp for the two-year rate, to 4.1378%.
The German ten-year yield fell 6.1 bps to 2.145%, while the two-year rate fell 11.9 bps to 2.514%.
VALUES
Burberry on Friday lowered its full-year profit forecast for the second time in three months, sending the stock down 5.51%. In its wake, competitors LVMH and Kering fell by 0.34% and 1.20% respectively.
Airbus gained 3.70% after reporting a record number of aircraft orders in 2023.
Carmat plunged 14.80%, the manufacturer of artificial hearts having announced a postponement of the repayment of the loan taken out from the European Investment Bank (EIB).
Major shareholders of digital record label Believe have been considering delisting the company in recent weeks, sources told Reuters. The stock fell 7.91%.
Volvo Cars will halt production at its plant in Belgium for three days next week due to delays caused by tensions in the Red Sea, sending the stock down 2.76%.
A WALL STREET
Wall Street is down at closing time in Europe, with investors digesting numerous data and company results, including those of major American banks.
At closing time in Europe, trading on the New York Stock Exchange indicated a drop of 0.53% for the Dow Jones, 0.25% for the Standard & Poor’s 500 and 0.12% for the Nasdaq Composite.
CHANGES
Foreign exchange markets are quiet as traders digest the numerous statements and data releases.
The dollar nibbles 0.05% against a basket of reference currencies, while the euro loses 0.09% to 1.096 dollars. The pound sterling fell 0.13% to 1.2744 dollars.
OIL
Geopolitical tensions are pushing crude oil higher.
Brent increased by 1.55% to $78.61 per barrel, American light crude (West Texas Intermediate, WTI) increased by 1.53% to $73.12.
(Written by Corentin Chappron, edited by Tangi Salaün)
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