January 4, 2023

The world stock markets were well oriented on Wednesday, especially the places of the euro zone which jumped by regarding 2%, once morest a backdrop of slowing inflation, falling gas and oil prices, as well as falling bond rates.

The European stock markets have chained their third consecutive session of increase: Paris jumped by 2.30%, Frankfurt by 2.18%, Milan by 1.74% and the European benchmark index Eurostoxx 50 by 2.36%. Only the London Stock Exchange ended more modestly, climbing 0.41%, weighed down by the decline in oil and mining stocks.

In Zurich, the SMI gained 1.47%.

Wall Street was more cautious: the Dow Jones gained 0.71%, the S&P 500 took 1.15% and the Nasdaq 1.04%, around 5:05 p.m. GMT.

Franklin Pichard, managing director of Kiplink Finance, notes a “total decorrelation between the American and European markets”, a trend “which might be interesting this year”.

The wave of optimism in Europe was generated by the decline in natural gas prices, combined with the decline in inflation in Germany and France in December, allowing bond yields to decline.

French inflation slowed more than expected in December, to 5.9% over one year, once morest 6.2% in November, according to the provisional estimate published by INSEE on Wednesday. A good surprise following the announcement the day before of a German inflation rate reduced below 10% for the first time since August in Europe’s largest economy.

“If inflation is in the process of reducing, perhaps the situation will be less dramatic than it might have been anticipated,” points out Mr. Pichard.

Especially since the fall in gas and oil prices reinforces the hypothesis of a stronger decline in inflation than expected for the moment.

Europe’s benchmark natural gas contract, the Dutch TTF, hit a low since late November 2021 on Tuesday, erasing gains made in 2022 in the wake of war in Ukraine. It was worth 64.60 euros per megawatt hour, down 10.67% around 5:00 p.m. GMT.

Oil prices lost around 5% in session, weighed down by concerns regarding the health situation in China. Around 5:00 p.m. GMT, a barrel of Brent from the North Sea for delivery in March was worth 78.60 dollars (-4.29%) and that of West Texas Intermediate (WTI) for delivery in February was worth 73.47 dollars (-4, 50%).

In response, bond rates fell sharply, influenced by monetary policy expectations: the French yield on the 10-year bond thus fell to 2.78%, a sharp decline compared to 3.09% on Friday at the closing, a record for 10 years. The US 10-year rate fell less, to 3.70%, around 4:55 p.m. GMT, once morest 3.74% on Tuesday.

The New York indices were slowed down at the start of the session by the publication of an ISM manufacturing activity index which fell to 48.4 in December, a little less than expected.

In the second part of the American session, the publication of the minutes of the last meeting of the American central bank (Fed) should “decide the last hours of exchanges, even if investors are wondering whether they will learn something new,” said Sam Stovall of CFRA.

Earlier, Hong Kong jumped more than 3%, buoyed by tech stocks and the prospect of new fiscal measures to support the Chinese economy.

Double GE

The subsidiary of the American conglomerate General Electric (GE) dedicated to the health sector has entered the Nasdaq, marking the first stage of the split of the former industrial giant into three separate companies.

The title of GE HealthCare Technologies gained 6.15% and that of GE 3.46%.

On the side of the dollar and bitcoin

The dollar retreated once morest the euro and the pound following its gains on Tuesday. Around 5:00 p.m. GMT, the greenback lost 0.66% once morest the single European currency, at 1.0619 dollars for one euro, and 0.75% once morest the British currency, at 1.2060 dollars for one pound.

Bitcoin, considered a risky asset, rose 1.170% to $16,855.