Markets regain appetite for risk, Europe ends higher – 10/16/2023 at 6:21 p.m.


Traders on the New York Stock Exchange

European stock markets ended higher on Monday as the markets’ attention returned to the trajectory of central banks and the risks of escalation in the Middle East were deemed less likely by investors.

In Paris, the CAC 40 increased by 0.27% to 7,022.19 points, while the German Dax gained 0.34% and the British Footsie 0.41%.

The EuroStoxx 50 index ended the session with an increase of 0.33%, compared to 0.21% for the FTSEurofirst 300 and 0.23% for the Stoxx 600.

The diplomatic efforts of the United States to contain the conflict between Israel and Hamas in the Gaza Strip are favorably judged by investors, who are regaining their appetite for risk.

The markets are therefore once again focusing on the positioning of central banks as the next monetary policy meeting of the American Federal Reserve will be held on November 1, and the European Central Bank (ECB) will meet on Thursday October 26.

“Given the downward trend in core inflation and the uncertainty of the economic outlook, the ECB is expected to remain on hold until the economic outlook is clearer, probably not before March of next year,” estimate Societe Generale economists.

In the United States, retail sales for September and the Philly Fed activity indicator are due this week, as earnings season continues.

Of the 32 S&P 500 companies that have already published their results, 28 surprised the consensus upwards, which encourages the markets.

Separately, several monetary policymakers made encouraging statements: On Friday, Philadelphia Federal Reserve President Patrick Hasker said the Fed was probably done with rate hikes, while Fed Chairman of Chicago, Austan Goolsbee, said it was “undeniable” that the slowdown in inflation was a trend, not a statistical artifact.

VALUES

The chairman of the board of directors of Atos, Bertrand Meunier, the target of criticism from minority shareholders for several weeks, has left his position, the French IT group announced on Monday. He will be replaced by Jean-Pierre Mustier, former manager of Unicredit, which supported the stock which closed up 5.78%.

Telecom Italia lost 6.23%, trailing the Stoxx 600, after the group said on Monday that the American fund KKR had submitted a firm offer for its fixed line network. The lack of clarity around the offering affected the stock.

British online supermarket Ocado ended down 5.80%, among the worst performers on the Stoxx 600, after Barclays downgraded its recommendation to “underweight”.

A WALL STREET

Wall Street advances at closing time in Europe, supported by encouraging comments from monetary policy makers and a manufacturing activity indicator that surprised on the rise.

At closing time in Europe, trading on the New York Stock Exchange indicated an increase of 1.02% for the Dow Jones, compared to 1.02% for the Standard & Poor’s 500 and 1.07% for the Nasdaq. Composite.

RATE

Yields resume their rise as markets reassess the risks posed by the Israeli-Palestinian conflict, which had pushed investors to buy safe assets last week.

At the close of the rate markets in Europe, the yield on the ten-year Treasury increased by 7.7 bp to 4.706%, while the two-year rate rose by 3 bp to 5.0836%.

The yield on the German ten-year rose by 5 bps to 2.782%, while that of the two-year rate rose by 2.6 bps to 3.155%.

CHANGES

The dollar is declining under pressure from a strengthening euro, while investors position themselves ahead of a week full of data and statements from members of the Fed’s board of governors.

The dollar lost 0.29% against a basket of reference currencies, while the euro strengthened by 0.33% to 1.0543 dollars. The pound sterling rose 0.45% to $1.2196.

OIL

The United States and Venezuela are expected to announce an easing of sanctions restricting Venezuelan crude exports, according to the Washington Post, causing crude to decline.

Brent fell 1.02% to $89.96 per barrel, with American light crude (West Texas Intermediate, WTI) declining 0.82% to $86.97.

(Written by Corentin Chappron, edited by Kate Entringer)



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