by Marc Angrand
PARIS (Reuters) – European stocks posted their best performance in more than a year on Friday and erased almost all of their losses from the previous day, the scale considered weak by Western sanctions targeting Moscow and the evocation of possible talks between Russia and Ukraine was enough to restore investor confidence despite the ongoing fighting.
In Paris, the CAC 40 gained 3.55% (231.38 points) to 6,752.43 points. In London, the FTSE 100 advanced 3.91% and in Frankfurt, the Dax gained 3.67%.
The EuroStoxx 50 index ended up 3.69%, the FTSEurofirst 300 jumped 3.17% and the Stoxx 600 climbed 3.32%, its biggest single-session percentage gain since November. 2020. He had lost 3.83% on Thursday after the launch of the Russian offensive.
The rebound, already marked mid-session, accelerated after statements by the Kremlin spokesperson assuring that Russia was ready to send a delegation to Minsk, the capital of Belarus, for discussions with Ukraine.
At the same time, Kiev was still the target of Russian missiles and troops from Moscow continued their advance towards the Ukrainian capital.
Prior to Moscow’s statements, investors had already been reassured by the overall reduced scope of the sanctions against Russia, which for the moment avoid the exclusion of the latter from the international payment system SWIFT and eliminate in the short term any risk of rupture. supply of Russian natural gas to Europe.
At the time of the close in Europe, Wall Street was also evolving in the green, the Dow Jones winning 1.74%, the Standard & Poor’s 500 1.62% and the Nasdaq Composite 1%.
Over the week as a whole, the CAC 40 lost 2.56% and the Stoxx 600 dropped 1.58%, its seventh negative weekly performance in eight weeks.
VALUES
The strongest sectoral increase of the day in Europe is for community services (“‘utilities”), benefited both by their defensive nature and their ability to take advantage of a diversification of the continent’s energy supplies to reduce dependence on electricity. Russia.
The Stoxx sector index gained 4.75%, RWE 6.07%, Enel 5.77%, Engie 5.1% and EDF 5.76%.
The banking compartment meanwhile rebounded by 4.27%.
Defense stocks remained surrounded, like the French Thales (+4.10%) or the British BAE Systems (+3.36%).
In earnings news, Valeo fell 10.46% after analysts deemed disappointing medium-term forecasts and Casino fell 12.29% after falling profits and rising debt in 2021.
Saint-Gobain, on the contrary, gained 6.35% after a record year.
In Frankfurt, Volkswagen and Porsche SE gained 5.24% and 3.77% respectively after details of their agreement on a possible Porsche AG IPO were presented.
THE INDICATORS OF THE DAY
In the United States, household consumption expenditure increased more than expected in January (+2.1%), which could support growth in gross domestic product (GDP), but inflationary pressures have increased further, the PCE price index posting its strongest annual increase since 1982 (+6.1%).
In addition, durable goods orders excluding defense and aeronautics, considered a good barometer of business investment, rose 0.9% last month.
The morale of American households has deteriorated to its lowest level since 2011 according to the monthly survey from the University of Michigan.
RATE
European bond yields ended up sharply in the wake of those of US Treasury bonds: that of the ten-year German Bund, a benchmark for the euro zone, posted a rebound of five basis points at the end of the session to 0.219%, returning to its level of Wednesday, and its French equivalent rose almost as much to 0.708%.
Investors are now waiting to know to what extent the conflict in Ukraine will influence the policy of the European Central Bank. The president of the institution, Christine Lagarde, assured that the ECB was ready to do what is necessary to ensure price stability and financial stability but it will be necessary to wait until March 10 to know its new economic forecasts.
On the American market, the ten-year was displayed at 1.9774% at the time of the European close after rising to 2.016% just after the publication of the PCE price index.
CHANGES
The dollar is down sharply against other major currencies (-0.40%) the day after its strongest percentage rise in more than three months (+0.99%).
This decline is explained by the general revival of risk appetite but also by the fact that in the eyes of some forex traders, the figures for household income and expenditure could encourage the Federal Reserve to moderate in terms of monetary policy next month.
OIL
The relief on geopolitical tensions which favored the rebound in equities is also reflected in a drop in oil prices, while the trend was up at the start of the session: Brent fell 2.5% to $96.60 on barrel and US light crude (West Texas Intermediate, WTI) 2.14% to 90.82 dollars.
They had risen to $101.99 and $95.64 earlier in the day.
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