RISK APPETITE SUPPORTS REBOUND IN EUROPE
by Claude Chendjou
PARIS (Reuters) – European stocks ended higher on Tuesday but Wall Street was in disarray at mid-session, the rebound being fueled by bargain buying on several major stocks, after a two-month low in the Stoxx 600 pan-European linked to inflation fears and the risk of a slowdown in global growth.
In Paris, the CAC 40 gained 0.51% to 6,116.91 points. The British Footsie advanced 0.37% and the German Dax 1.15%.
The EuroStoxx 50 index gained 0.79%, the FTSEurofirst 300 0.78% and the Stoxx 600 0.68%.
Although concerns over rising interest rates and the long-term risk of a global recession are far from over, investors have been looking for grounds for hope during this volatile session, the Stoxx 600 pan-European having touched a low since March 8 on Monday and on Wall Street, the Nasdaq and the S&P-500, having lost since the beginning of the year respectively 24% and 15%.
According to several analysts, in addition to cheap purchases, investors bet on a pleasant surprise concerning the consumer price data in the United States for the month of April which will be published on Wednesday. Inflation figures for Germany and China will also be known on the same day.
“It’s quiet ahead of inflation data tomorrow, so that’s providing some respite for risky assets,” said Western Union Business Solutions analyst Joe Manimbo.
Corporate news also boosted risk appetite in Europe.
VALUES IN EUROPE
The major compartments of the European stock market all ended in the green, with the strongest increases being in finance (+1.42%) and new technologies (+0.52%), while the rebound in energy (+0.15%) was limited by fears, still present, about global demand.
BNP Paribas (+2.14%) took the lead among banks on the CAC 40 and the Italian Unicredit (+5.46%) stood out on the Stoxx 600.
SAP, ASML and Stmicroelectronics were also searched in the “techs”.
Apart from these two sectors, Airbus (+0.8%) was supported by the publication of monthly figures for its deliveries and orders.
Renault, which oscillated between rise and fall, ended in the red despite the announcement of the entry of the Chinese Geely into the capital of its South Korean subsidiary and the presentation of the strategic objectives of Mobilize, its new brand of mobility services. .
In mergers and acquisitions, Swedish smokeless tobacco specialist Swedish Match jumped 24.9% as Philip Morris began takeover talks.
AT WALL STREET
At the close in Europe, the Dow Jones fell 0.26%, the Standard & Poor’s 500 0.12%, while the Nasdaq advanced 0.17%
The session was volatile as the three indices opened sharply higher, after three consecutive days of decline, thanks to opportunistic buying on oversold stocks.
Apple, Meta Platforms, Amazon, Microsoft, Tesla and Nvidia, which together have lost more than $1 trillion in market capitalization since the Fed raised interest rates by half a point last Wednesday, are now only up marginally. However, the “tech” index remains up 0.9%.
In banks, Morgan Stanley fell 1.7% with the sector index which lost 1.9% in the wake of the sharp decline in bond yields.
In corporate news, movie theater operator AMC Entertainment drops 6.5% despite better-than-expected quarterly revenue and Novavax drops 7%, first-quarter COVID-19 vaccine shipments having disappointed.
The Biohaven laboratory soars by 70% after the announcement of its takeover by Pfizer (+0.8%) for 11.6 billion dollars (11 billion euros)
THE INDICATORS OF THE DAY
Investor sentiment in Germany has improved since the beginning of May with an index rising to -34.3 after -41.0 in April, shows Tuesday the survey of the institute of economic studies ZEW.
CHANGES
The dollar, which touched a 20-year peak on Monday, is still appreciating, by 0.15%, against a basket of international currencies in the prospect of a further rate hike by the Fed next month.
The euro, down 0.16%, is trading at 1.0539 dollars.
In cryptocurrencies, bitcoin, which hit a near ten-month low on Tuesday, rose nearly 4% to $31,268. In November, it was still trading at $69,000.
RATE
Bond yields are falling as the market tries to gauge inflation risks ahead of the release of US consumer price data.
The ten-year rate fell 13 basis points to 2.945% but the two-year rate was almost stable at 2.62%.
In Europe, the yield of the ten-year German Bund and that of the French OAT of the same maturity fell nearly nine basis points to 1.003% and 1.549% respectively, as investors chose to hedge after the recent rate hike. linked to expectations of increases in the cost of credit.
OIL
The oil market is penalized by both the strength of the dollar and fears of a drop in demand in the context of health restrictions in China.
Brent fell 2.26% to 103.62 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.94% to 101.08 dollars.
(Report Claude Chendjou, edited by Jean-Michel Bélot)