EUROPEAN STOCK MARKETS END LOWER
by Claude Chendjou
PARIS (Reuters) – European stock markets ended lower on Friday at the end of a volatile session and Wall Street was trading in the red at mid-session, investors being torn between fears aroused by the announcement of an intensification of bombings in Ukraine and the hope of a diplomatic solution to this crisis thanks to a meeting scheduled for next week between the United States and Russia.
In Paris, the CAC 40 ended down 0.25% at 6,929.63 points. The British Footsie fell by 0.32% and the German Dax by 1.47%.
The EuroStoxx 50 index fell by 0.95%, the FTSEurofirst 300 by 0.78% and the Stoxx 600 by 0.81%.
Over the whole week, the CAC 40 lost 1.16% and the Stoxx 600 1.87%.
The European stock markets, which had progressed until mid-session on Friday after the announcement Thursday evening of a meeting at the end of next week between the American Secretary of State, Antony Blinken, and the Russian Minister of Foreign Affairs, Sergei Lavrov, finally fell back into the fence.
Pro-Russian separatists in eastern Ukraine announced on Friday their intention to evacuate civilians from the breakaway regions they rule to Russia, as shelling intensifies in the region for the second day in a row, accentuating Western fears of an imminent Russian invasion.
However, the Russian press has reported that new infantry and tank units are returning to their bases as US President Joe Biden is due to chair a telephone meeting on the Ukraine crisis on Friday with several world leaders, including Emmanuel Macron.
“Although we were warned that a Russian invasion was very likely, the meeting (Blinken-Lavrov) brings hope that nothing will happen until then, offering some stability to the markets”, notes Craig Erlam , market analyst at Oanda.
The volatility index, also known as the “fear index”, down for a good part of the session, ended up 8.5% in Europe and took 2.5% in the United States at the time of the closing of the European Stock Exchanges.
VALUES IN EUROPE
On the Stoxx 600, the defensive food and beverage sector (+0.4%) offered some support to equity markets, while on the other side of the spectrum, transport and leisure ( -3%), as well as oil and gas (-1%) were among the biggest declines.
The banking and insurance sectors, down 0.4% and 1.2% respectively, suffered from profit taking.
In the results publications, Renault ended almost unchanged despite the automaker’s announcement of a profit in 2021 after two years of losses.
Call center specialist Teleperformance climbed 4.8% thanks to its results and forecasts.
Hermès, on the other hand, fell 4.1%, the market sanctioning results below expectations, the fourth quarter having been held back by constraints on production.
EDF for its part gave up 2.3% after the announcement of a capital increase of 2.5 billion euros, while Allianz sold 3.7% due to provisions of 3.7 billion euros. euros related to disputes over the management of certain funds in the United States.
AT WALL STREET
At the close in Europe, the Dow Jones fell 0.3%, the Standard & Poor’s 500 0.4% and the Nasdaq 0.8%, as the indices struggled to find a clear direction due to uncertainties over Ukraine.
“These geopolitical concerns do not necessarily have a direct impact on equity markets, but they have the ability to create uncertainty,” notes Robert Pavlik, portfolio manager at Dakota Wealth.
“Nobody wants to start the long weekend with too much exposure,” he adds, referring to Monday, a public holiday in the United States.
On the sector level, apart from utilities and real estate, all the other compartments of the S&P-500 are in the red, with high technologies losing 0.8%.
A few results publications are also driving the trend, such as the image of lithium producer Livent, which is up 2.4% after its annual forecasts, while, on the other hand, the outlook for the fast food chain Shake Shack (-4.5 %) and the “streaming” device manufacturer Roku (-25%) are sanctioned.
In mergers and acquisitions, the American manufacturer of industrial materials Dupont de Nemours takes 0.3% after the announcement of the sale of its division of mobility and materials to Celanese (-3.6%) for 11 billion dollars ( €9.6 billion).
THE INDICATORS OF THE DAY
The consumer price index in France for the month of January, harmonized according to European standards (HICP), was confirmed on Friday up 3.3% over one year.
CHANGES
On the currency market, the dollar rose again (+0.26%) against a basket of major international currencies, taking advantage of its status as a safe haven asset.
The euro, down 0.27%, is trading at 1.1327 dollars.
RATE
Bond yields fell, affected by some risk aversion. The ten-year US Treasury bond rate fell 3.8 basis points to 1.935%, its lowest level since Monday, when it hit a two-and-a-half-year peak at 2.065% on Wednesday.
In Europe, the upward movement in yields seen at the start of the session also fizzled, with the ten-year German Bund ending Friday down 2.5 points to 0.206%, while its French equivalent of the same maturity fell. contracted by 1.1 points to 0.695%.
OIL
The oil market is also volatile, torn between speculation about the possible success of international negotiations concerning Iran’s nuclear program and tensions in Ukraine.
Brent crude, down in the morning, gained 0.3% to 93.2 dollars at the close of trading in Europe, while American light crude (West Texas Intermediate, WTI) was stable at 91.7 dollars.
(Report Claude Chendjou, edited by Jean-Stéphane Brosse)