by Claude Chendjou
PARIS (Reuters) – European stock markets ended sharply higher on Thursday and Wall Street was also trading in the green at mid-session, at a two-week peak, with the markets now convinced that the major central banks are done with increases interest rates, which is fueling a clear easing in the bond compartment.
In Paris, the CAC 40 ended with a gain of 1.85% to 7,060.69 points. The British Footsie advanced 1.40% and the German Dax gained 1.48%.
The EuroStoxx 50 index increased by 1.90% and the FTSEurofirst 300 by 1.51%. The Stoxx 600 gained 1.58% with a jump of 5.06% in the real estate sector.
At the time of closing in Europe, the Dow Jones advanced by 1.25%, the Standard & Poor’s 500 by 1.54% and the Nasdaq by 1.44%.
The three main Wall Street indices reached their highest level during the session since October 19, while all the main sectors of the S&P-500 are in the green, real estate (+3.39%) recording one of the biggest gains.
After the European Central Bank (ECB) last week, the American Federal Reserve (Fed) and the Bank of England (BoE) in turn opted on Wednesday and Thursday respectively for a pause in the current monetary tightening cycle. .
Fed Chairman Jerome Powell, although he did not rule out further increases in the cost of credit, acknowledged that the recent rise in bond yields was having an impact on the economy, a message that was not perceived markets as less aggressive.
“Our base case is that the Fed is done (with rate hikes), but it will take time to reduce them,” said Raphael Olszyna-Marzys, an economist at J. Safra Sarasin.
RATE
On the bond market, the yield on ten-year Treasuries fell by more than 12 basis points, to 4.6841%, after hitting a three-week low during the session, at 4.62%. This rate had exceeded the 5% threshold at the beginning of October.
In addition to the Fed’s announcements, the Treasury Department highlighted its intention to reduce its long-term debt issuance as the market anticipated larger auctions.
The bond easing is a little less strong in the euro zone where the ten-year German Bund yield fell by almost four points, to 2.704%, after falling during the session to 2.70%, the lowest since on September 15.
The British Gilt yield, for its part, lost more than 12 points to 4.372%, after the BoE’s decision to leave its rates unchanged.
CHANGES
The dollar is suffering from the appetite for risk and the decline in bond yields, losing 0.59% against a basket of reference currencies, after having already lost 0.8% on Wednesday.
The euro rose to 1.0612 dollars, up 0.42%, while the pound sterling stood at 1.2177 dollars (+0.22%).
VALUES
In business news, Atos ended in the green after the announcement of a stake of nearly 10% by the company Onepoint in the capital of the group which is currently undergoing restructuring.
The Danish pharmaceutical group Novo Nordisk, which this year took the place of LVMH (+3.82%) as the largest market capitalization in Europe, advanced by 3.17% after a record result in the third quarter.
The British group Shell gained 4.17% after quarterly results in line with expectations, while the Swiss Adecco Group recorded one of the best performances in the Stoxx 600 with a gain of 12.83% on the back of a profit quarterly better than expected.
Meal delivery company Just Eat Takeaway.com climbed 5.91% in the wake of DoorDash’s forecasts (+16.44%).
Numerous quarterly publications such as Qualcomm (+6.10%), Electronic Arts (+4.40%), Paypal, Moderna (-7.83%), Eli Lilly (+4.22%) and Regeneron Pharmaceuticals (+ 4.05%) also liven up trading on Wall Street while awaiting results in the evening from Apple (+1.72%), the world’s largest capitalization.
TODAY’S INDICATORS
Activity in the euro zone’s private manufacturing sector contracted again in October as new orders fell at the fastest pace since 1997 when data collection began.
Unemployment claims rose more than expected in the United States last week to 217,000 compared to 212,000 (revised) the previous week, according to the Labor Department.
OIL
The status quo on rates decided by the Fed and the BoE supports the oil market, driven by the appetite for risk, which could allow the two crude benchmarks to end three sessions in a row in the red: the a barrel of Brent gained 2.19% to 86.48 dollars and that of American light crude (WTI) gained 2.26% to 82.26 dollars.
(Writing by Claude Chendjou, edited by Kate Entringer)
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