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by Laetitia Volga
PARIS (Reuters) – European stocks rose slightly on Monday halfway through a calm session, the day being a public holiday in the United States, on the back of optimism about a moderation in inflation and a soft landing of the economy.
US stock and bond markets will remain closed for the Martin Luther King Day celebration.
In Paris, the CAC 40 gained 0.26% to 7,041.81 points around 12:15 GMT. In Frankfurt, the Dax took 0.3% and in London, the FTSE won 0.2%, close to its record.
The pan-European FTSEurofirst 300 index rose 0.28%, the Eurozone EuroStoxx 50 0.13% and the Stoxx 600 0.3%.
The latter, at its highest since April, is moving into the green for the fourth consecutive session.
Stock markets remain supported by signs of slowing price growth in the United States and Europe, despite statements by Federal Reserve and European Central Bank officials that underlying inflation is too high to justify a change of course in monetary policy in the near future.
However, some actors want to believe it. “Based on the US jobs report for January and February, the Fed’s expected rate hike of 25 basis points on February 1 could be the last hike,” said Steven Blitz, chief economist at TS Lombard. “Expect rate cuts to begin by the middle of the year.”
The coming week will be punctuated in particular by the publications of results from leading companies such as Goldman Sachs, Morgan Stanley and Netflix.
Investors will also follow this week the interventions of central bankers, including the President of the ECB, Christine Lagarde, within the framework of the World Economic Forum in Davos.
VALUES IN EUROPE
Orange yields 1.79%, the red lantern of the CAC, after the lowering of Jefferies’ recommendation to “keep” and CGG climbs 7.99% after Societe Generale’s move from “keep” to “buy”.
The Telecom Italia share (+2.28%) increased its gains after the announcement of the resignation of Arnaud de Puyfontaine from the board of directors of the Italian operator.
Among the biggest risers in the Stoxx 600, Temenos gained 6.43% after announcing the departure of its chief executive following another drop in its quarterly results.
CHANGES
The yen is losing some ground after hitting a more than seven-month high against the dollar on speculation that the Bank of Japan (BoJ) will change or even abandon its bond yield control policy at its meeting scheduled for Wednesday.
“The pressure on the Japanese bond market and on the BoJ will increase (…) Inflation is back in Japan and the BoJ has a lot of catching up to do, so it may be easier to remove the band-aid quickly “said Neil Wilson, analyst at Markets.com.
Against a basket of benchmark currencies, the dollar was stable (+0.09%). The euro is unchanged around 1.0822 dollar.
RATE
Yields on government bonds in the euro zone remain strong before auctions, particularly in France, Germany and Spain: that of the ten-year German rose by 4.5 basis points to 2.183% and the ten-year French rose to around 2 .66%.
OIL
The oil market is retreating after jumping more than 8% last week, its biggest weekly gain since October, on hopes of a recovery in demand in China.
Brent fell 0.29% to 85.03 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.23% to 79.68 dollars.
(Laetitia Volga, editing by Kate Entringer)
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