Stock market: Europe closes in the red, uncertain of the trajectory of rates in the euro zone

PARIS (Reuters) – European markets ended lower on Friday, as investors worried about the trajectory of rates in the euro zone.

In Paris, the CAC 40 lost 0.26% to 8,167.5 points, while the German Dax fell by 0.17% and the British Footsie by 0.22%.

The EuroStoxx 50 index ended the session down 0.18%, compared to 0.13% for the FTSEurofirst 300 and -0.13% for the Stoxx 600.

Over the week, the CAC 40 lost 0.63% and the Stoxx 600 gained 0.41%.

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Investors were concerned by comments from the European Central Bank’s chief economist, Isabel Schnabel, who noted on Friday that while a rate cut in June was possible, successive cuts were much more uncertain.

Markets fear that the ECB will not ease its monetary policy as much as hoped, while investors are now betting on 65 basis points of easing this year, two cuts and a possible third.

While the Fed delays its own rate cuts, a more wait-and-see posture from the ECB would have the advantage of not widening the monetary policy gap between the two central banks, which would avoid putting pressure on euro assets. .

On the other hand, European growth could suffer from lastingly restrictive financial conditions, because activity in the euro zone does not display the dynamism of the American economy.

The decline in European assets is all the more surprising given that the good inflation figures in the United States on Wednesday took the indices to records.

“The (moderate) reaction of the equity markets reflects the underlying feeling of uncertainty,” explains Florian Ielpo, head of research at Lombard Odier IM.

“It appears that falling interest rates are no longer enough to support markets, raising the specter of potential pitfalls. In particular, investors are now faced with the following conundrum: a slower growth environment could will it have a negative impact on the results or not?” asks the economist, who nevertheless emphasizes that the feeling remains strong for the moment.

A WALL STREET

Wall Street is consolidating after setting records during the session on Thursday.

At closing time in Europe, the Dow Jones, the Standard & Poor’s 500 and 0.01% the Nasdaq Composite did not show any marked direction.

VALUES

Scor fell by 6.09% after reporting a net result lower than expectations and a disappointing performance from its life and health branch.

Artificial heart manufacturer Carmat fell 22.53% after announcing a fundraising of 16 million euros, its second capital increase this year.

Eiffage and Entech announced on Thursday that they had created a joint venture in energy storage, which increased Entech by 14.24%.

Richemont reported on Friday a drop in its sales over the three months to the end of March, but the markets considered its results reassuring and caused the stock to jump 5.71%.

RATE

European yields are rising, with interest rate markets worried about the monetary outlook in the euro zone.

At the close of the interest rate markets in Europe, the ten-year Treasury yield rose 2.5 bp to 4.4022%, compared to 1.4 bp for the two-year rate, to 4.8054%.

The German ten-year yield rose 6.8 bps to 2.512%, while the two-year yield rose 6.3 bps to 2.984%.

CHANGES

The pound strengthens against the dollar, with traders estimating that the rate gap between the United States and the United Kingdom will not widen this year as much as expected.

The dollar is stable against a basket of reference currencies, while the euro remains at $1.0866 and the pound sterling increases by 0.21% to $1.2693.

OIL

American data and the new Chinese support plan for the real estate sector support the barrel, which is increasing moderately.

Brent nibbles 0.38% to $83.59 per barrel, American light crude (West Texas Intermediate, WTI) strengthens by 0.4% to $79.55.

(Written by Corentin Chappron, edited by Sophie Louet)