Unemployment in the USA feeds doubts about the recovery

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EUROPEAN SCHOLARSHIPS END ON FALL

PARIS (Reuters) – Major European stock markets ended lower on Thursday as the unexpected increase in jobless claims in the United States rekindled fears of a weakening economic recovery, a scenario that is fueling risk aversion and market volatility for several days.

In Paris, the CAC 40 shows a closing decline of 0.83% (39.64 points) to 4,762.62 points, its worst closing since June 1.

In London, the FTSE 100 lost 1.3% and in Frankfurt, the Dax lost 0.29%. The EuroStoxx 50 index lost 0.64%, the FTSEurofirst 300 1.01% and the Stoxx 600 1.02%.

At the time of the close in Europe, Wall Street was moving in positive territory, benefiting from a rebound in technology stocks after a checkered start to the session: the Dow Jones gained 0.16%, the Standard & Poor’s 500 0.41 % and the Nasdaq Composite 0.63%.

US stocks started in the red after news of initial claims for unemployment benefits in the United States rose to 870,000 last week as the market anticipated a pullback to 840,000.

This bad surprise fueled risk aversion already palpable in European markets after France announced new measures to curb the spread of the coronavirus, such as the early closure of bars and restaurants or the total closure of sports halls in several regions.

The CBOE’s volatility index is up nearly 2% and its EuroStoxx 50 counterpart gained 6% on the day.

VALUES

Almost all of the major sectors of the European coast ended the day in the red, the only exception being for the automotive sector (+ 0.24%).

The biggest drops were in the distribution compartment, whose Stoxx index lost 2.2% and that of oil and gas (-2.13%).

In Paris, Airbus, the red lantern of the CAC 40, yielded 3.46%, suffering from fears related to new health measures and press reports according to which Delta Air Lines plans to postpone the delivery of 40 planes. Several sources, however, assure that the group does not intend to reduce its production rates.

Capgemini dropped 1.68% after quarterly forecasts and forecasts deemed disappointing from the American Accenture, which fell 6.12% on Wall Street.

The banking compartment has again benefited from speculations on its possible concentration, mainly in Italy: Banco BPM and Creval gained 5.8% and 11.61% respectively after press reports according to which they could become targets for Crédit Agricole SA (-1.83%).

TODAY’S INDICATORS

In the United States, the figures for jobless claims have relegated to the background the increase in sales of new homes, the highest for nearly 14 years in August at 1.011 million at an annualized rate.

In Europe, the Ifo business climate index in Germany reached its highest level since February at 93.4 after 92.5 in August. And in France, the Insee index rose to 92 after 90 last month.

CHANGES

The resurgence of risk aversion continues to favor the rise of the dollar, which reached its highest level in two months against a basket of benchmark currencies, the “dollar index” (+ 0.06%) heading towards a fourth consecutive session of increase.

The euro is one of the main victims of this movement since at 1.1658 dollar, it has increased its decline since the beginning of the week to more than 1.6%.

The pound sterling only briefly benefited from the announcement by the British Finance Minister, Rishi Sunak, of new partial unemployment compensation measures.

RATE

Benchmark bond yields are virtually stable in both Europe and the United States, at -0.501% for the ten-year German Bund and 0.6692% for its US equivalent.

OIL

The oil market is hesitant, with the rise in the dollar dampening the support given to prices by the sharp drop in inventories of crude, gasoline and distilled products last week in the United States.

Brent drops 0.29% to $ 41.65 per barrel and US light crude (West Texas Intermediate, WTI) yields 0.05% to $ 39.91.

(Marc Angrand, edited by Jean-Michel Bélot)

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