by Claude Chendjou
PARIS (Reuters) – European stock markets ended higher on Wednesday after two consecutive sessions of sharp declines and Wall Street was also moving in the green at mid-session, with equity markets supported by bargain buying and statements by Jerome Powell, the chairman of the American Federal Reserve, which suggests, according to investors, a moderate rise in interest rates this month in the United States.
In Paris, the CAC 40 ended with a gain of 1.59% to 6,498.02 points. The British Footsie took 1.36% and the German Dax 0.69%.
The EuroStoxx 50 index advanced 1.45%, the FTSEurofirst 300 0.8% and the Stoxx 600 0.9%.
Even if the fighting continues in Ukraine, especially in Mariupol, the target of intense Russian bombardment, Moscow said it was ready for new discussions this Wednesday with Kiev, fueling the hope of a de-escalation.
In terms of macroeconomic indicators, inflation in the euro zone accelerated more than expected in February, to 5.8% over one year, its all-time high, according to the first estimate published by Eurostat.
In the United States, to counter inflation, Jerome Powell, the president of the American Federal reserve, declared that an increase in the interest rates was envisaged this month in spite of the Ukrainian crisis. However, he did not specify the extent or speed of the rise in the cost of credit.
“Jerome Powell confirmed that an interest rate hike would likely come in March, but due to geopolitical concerns he opened the door to the possibility that the rate hike would be only 25 basis points from 50 basis points. basis, as well as an overall slightly more dovish outlook for future monetary policy,” said Ryan Detrick, market strategist at LPL Financial Research.
In a statement prepared for his hearing by the House Financial Services Committee, he said the US central bank would stick to its plan for monetary tightening even if the war in Ukraine makes “very uncertain” outlook for policy makers.
Before Jerome Powell’s statement, the monthly survey by the ADP firm had shown that the private sector in the United States had created more jobs than expected in February, a sign of a solid labor market.
VALUES IN EUROPE
In Europe, Oil & Gas (+4.08%) and Basic Resources (+2.51%) were the best performers on the Stoxx 600 (+3.7%), while On the other side of the spectrum, autos (-1.59%) recorded one of the biggest declines.
Rio Tinto advanced 3.83%, ArcelorMittal 3.61%, Shell 4.58% and TotalEnergies 8.07%.
In corporate news, BioMérieux and Albioma fell 8.67% and 14.87% respectively after the publication of their annual results and forecasts.
Korian jumped 8.87%, the responses of the operator of retirement homes on its practices in the France 2 program “Cash Investigation” having reassured investors. In its wake, Orpea advanced by 6.78%.
On the downside, Ericsson dropped 9.51%, the US Department of Justice having told him that the information provided concerning the investigation into alleged corruption in Iraq was insufficient.
AT WALL STREET
At the time of the close in Europe, the Dow Jones advanced 1.64%, the Standard & Poor’s 500 1.60% and the Nasdaq 1.09%, the indices being supported by the latest statements from Jerome Powell ahead of the House Financial Services Committee.
“They correspond to what was expected,” note Thomas Hayes, manager at Great Hill Capital, believing that Jerome Powell implied that the Fed would take into account the geopolitical context and not just a predetermined plan in advance.
The market is currently pricing a 5% chance of a 50 basis point rate hike from the Fed at its scheduled meeting this month versus a 95% chance of a 25 basis point hike.
In values, the major Wall Street banks are rebounding after two consecutive sessions of sharp decline, with the sector index up more than 3%.
Hewlett Packard Enterprise (+10.38%) is buoyed by its profit forecast for this year and Ford Motor (+7.30%) benefits from the announcement of a separation of its electric vehicle and combustion engine activities to better take on Tesla (-1.49%).
CHANGES
At foreign exchange, the dollar (+0.10%) is stable against a basket of international currencies, while the euro (-0.20%) reached its lowest level since May 2020 at $1.1057 during the session. before returning to 1.1103.
European Central Bank Vice President Luis de Guindos said the Russian invasion of Ukraine could result in slower economic growth in the bloc.
RATE
On the bond market, yields are rising after their heavy fall the day before. That of ten-year Treasuries gained 13 basis points to 1.8422% after hitting a two-month low at 1.682%.
Its German equivalent recovered eight points to 0.0110%, after falling into negative territory for the first time since February 1, on risk aversion and the downward revision of market expectations for rate hikes. of the ECB.
The yield of the French ten-year OAT ended up more than nine points at 0.4690%.
OIL
Oil prices continue to rise amid fears over supply in the face of geopolitical tensions. “OPEC+” also decided on Wednesday to stick to a limited increase in production in April.
The barrel of Brent jumped 4.85% to 110.14 dollars, after a peak since June 2014 at 113 dollars, and that of American light crude by 4.72% to 108.27 dollars after a high since August 2013, at $111.50.
TO BE FOLLOWED ON THURSDAY:
Minutes of the European Central Bank’s (ECB) January monetary policy meeting at 12:30 GMT and hearing of Fed Chairman Jerome Powell by the US Senate Banking Committee at 15:00 GMT.
(Some data may show a slight shift)
(Report Claude Chendjou, edited by Jean Terzian)
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