by Laetitia Volga
PARIS (Reuters) – European stock markets ended higher on Friday after statements deemed reassuring by several Federal Reserve officials on the pace of the rise in interest rates.
In Paris, the CAC 40 ended up 2.04% at 6,036 points. Britain’s Footsie gained 1.8% and Germany’s Dax gained 2.76%.
The EuroStoxx 50 index advanced by 2.42%, the FTSEurofirst 300 by 1.78% and the Stoxx 600 by 1.8%.
At the time of the European close, the three major Wall Street indices took between 1.5% and 2%.
The remarks of several Fed officials, reluctant to a rate hike of 1% in two weeks, somewhat reassured investors, worried about seeing the world economy headed for a recession as much as the Chinese economy contracted by 2.6% in the second quarter.
Today’s indicators showed that US retail sales rebounded strongly in June and, according to the University of Michigan survey, consumers lowered their inflation expectations due to the lower gasoline prices.
“A solid increase in retail sales – across most categories – is further evidence that the US economy continued to expand in June,” said Bill Adams, chief economist at Comerica Bank.
STOCK EXCHANGE
On the value side, the luxury groups Burberry and Richemont lost 3.76% and 2.85% respectively, after the publication of their quarterly turnover, penalized by the confinements in China, and the more marked drop than expected in the product. gross domestic of the world’s second largest economy over the April-June period.
On the rise, Lufthansa gained 6.93% after announcing, according to preliminary figures, an operating result in the second quarter against a loss a year ago.
Automaker Aston Martin jumped 23.70% after announcing that Saudi Arabia’s sovereign wealth fund would become its second largest shareholder with a nearly 17% stake in a capital increase.
In the United States, Citigroup and Wells Fargo gained 10.23% and 6.27% respectively after the publication of their quarterly results.
RATE
Yields on US Treasury bonds fell to 2.9152% for ten-year securities and 3.1075% for two-year ones.
If the two-ten-year segment of the yield curve remains inverted, the gap between the two maturities has narrowed to 19.4 basis points, against more than 27 points at the start of the day Thursday, its highest level since September 2000 according to Refinitiv data.
In Europe, the ten-year German fell to 1.1230%. Its Italian equivalent lost five basis points, to 3.355%, after jumping nearly 15 basis points on Thursday after the resignation of the President of the Council, Mario Draghi, rejected by the President of the Republic.
The political risk in Italy comes just before the European Central Bank releases details next Thursday on its new anti-fragmentation tool intended to contain excessive divergence in yield spreads between the debts of eurozone countries.
“Any enthusiasm that might arise over a well-designed instrument could be short-circuited because of political uncertainty,” said Rohan Khanna, strategist at UBS.
CHANGES
The greenback fell against a benchmark basket (-0.54%) on profit taking after a 20-year high the day before.
The euro rises around 1.009 dollar.
OIL
The oil market is up after a U.S. official told Reuters that Saudi Arabia is not expected to increase oil production anytime soon.
The rise in prices is also based on the hope of less sustained rate hikes in the United States.
Brent rose 2.52% to 101.6 dollars a barrel and US light crude (West Texas Intermediate, WTI) 2.46% to 98.14 dollars.
(Written by Laetitia Volga, edited by)
Copyright © 2022 Thomson Reuters