EUROPEAN STOCK MARKETS END LOWER
by Claude Chendjou
PARIS (Archyde.com) – European stock markets ended lower on Thursday and Wall Street was also trading in the red mid-session on fears of an acceleration of monetary tightening in the United States, which could ultimately affect global growth.
In Paris, the CAC 40 posted a loss of 1.01% to 6,206.26 points. The British Footsie fell by 1.56% and the German Dax by 0.64%.
The EuroStoxx 50 index fell 0.94%, the FTSEurofirst 300 0.62% and the Stoxx 600 0.75%.
In the United States, the money markets are mainly expecting a 75 basis point rise in the cost of credit in June as new data showed that inflation had slowed in April but remained at a very high level. .
According to the US Department of Labor, producer prices rose 11.0% year on year in April, compared to an 11.5% gain the previous month, and consumer prices rose 8.3% after +8.5% in March.
“What we’re seeing is that inflation is starting to slow down, but the pace isn’t as fast as we’d hoped. So I think the markets are still in inflation fear,” Gene said. Goldman, chief investment officer at Cetera Investment Management.
“There’s really a lot of uncertainty around the Fed right now. If it’s too aggressive, it’s going to hurt economic growth, but (if) it’s too conservative, higher inflation will hurt consumption, which which will also affect growth,” he added.
In the euro zone, where inflation is at an annual rate of 7.5%, several officials from the European Central Bank, such as the governor of the central bank of Ireland, Gabriel Makhlouf, and Peter Kazimir, his counterpart at the central bank of Slovakia, again urged the institution to tackle rising prices.
“We expect inflation data to remain a central concern for policymakers and investors over the coming months,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note.
At the same time, the war in Ukraine, Western sanctions against Russia, health restrictions in China continue to weigh on investor morale.
A sign of market nervousness, the index measuring volatility in the United States is moving above 33 points and its European equivalent ended up 4.1% at 32.3 points.
VALUES IN EUROPE
On the pan-European Stoxx 600, all major sectors ended in the red, with Consumer Discretionary (-1.32%), Basic Resources (-2.94%) and Automotive (-1.22%) blaming one of the biggest drops.
The luxury compartment, exposed to China, fell with Kering, LVMH, Hermès, Richemont and even Tod’s, which lost 1.33% to 2.68%.
The results of Siemens (-2.48%), which announced write-downs and charges due to its withdrawal from Russia, and HeidelbergCement (-4.64%) disappointed, while those of STMicroelectronics (+3, 97%) Commerzbank (+0.26%) were well received.
The British telecom operator BT (+0.96%) took advantage of the announcement of the finalization of an agreement to merge its sports content division with Discovery.
A WALL STREET
At the time of the close in Europe, the Dow Jones fell by 0.95%, the Standard & Poor’s 500 by 0.79%, but the Nasdaq by 0.37%.
The session is volatile, fueled by fears over interest rates and the latest statements from US Treasury Secretary Janet Yellen, who assured that the US Federal Reserve has a plan to reduce inflation without causing a recession. .
The technology compartment yields 1.74%. Apple, which on Wednesday lost its position as the world’s largest market capitalization in favor of Saudi Aramco, still dropped 1%, penalized by the warning from Foxconn, which reported a slowdown in demand for electronic products.
In business results, Walt Disney fell 2.6% after a second quarter below expectations. The entertainment giant further warned that supply issues and rising labor costs could affect its accounts.
THE INDICATORS OF THE DAY
Preliminary data released by the Office for National Statistics (ONS) on Thursday showed the UK economy recorded an unexpected contraction in March of 0.1% following a fall in vehicle sales linked to the supply chain issues.
US jobless claims rose unexpectedly last week to 203,000.
CHANGES
The dollar index, which measures the variations of the greenback against a basket of currencies, gained 0.73%, the highest in 20 years, benefiting from both inflation figures in the United States and its status as a safe-haven asset.
The euro, down 1.22% to $1.0383, is at its lowest level since January 2017.
In cryptocurrencies, bitcoin fell to $25,401.05, hitting a 16-month low.
RATE
The yield on ten-year Treasuries fell 7.1 basis points to 2.8425%, penalized more by doubts about long-term economic growth than short-term inflation.
The spread between yields between ten-year and two-year US bonds, which measures the risk of recession, is now 26 basis points.
In Europe, the ten-year German Bund yield lost 13.1 basis points to 0.872% and its French equivalent 24.5 points to 1.384%.
OIL
Oil prices are also affected by fears of a recession, which are taking precedence over worries about supply and geopolitical tensions.
Brent lost 0.41% to 107.95 dollars a barrel and US light crude (West Texas Intermediate, WTI) fell 0.88% to 106.64 dollars.
(Report Claude Chendjou, edited by Sophie Louet)