PARIS (Reuters) – Stock market indexes ended mixed on Thursday in Europe, where the market mood remained dominated by pending announcements from the U.S. Federal Reserve.
In Paris, the CAC 40 rose 0.27% to 7,222.15 points. The UK Footsie lost 0.32% and the German Dax rose 0.18%.
The EuroStoxx 50 index rose 0.13%, the FTSEurofirst 300 0.02% and the Stoxx 600 fell 0.02%.
At the close in Europe, Wall Street was in the green, with the Dow Jones gaining 0.2%, the Standard & Poor’s 500 up 0.34% and the Nasdaq Composite up 0.9%.
Growth stocks are doing well there, benefiting from the fall in government bond yields.
Ease is across the board in bond markets following the announcement of a larger-than-expected rise in weekly US jobless claims to 261,000, the highest since October 2021.
This indicator, by suggesting a slowdown in the labor market, somewhat calms the outbreak of uncertainty that is winning investors over the Fed’s decision next Wednesday.
The unexpected interest rate hikes decided by the central bank in Canada and Australia are raising fears that the American institution is going the same way. Markets are pricing the odds of the Fed taking a break next week at 64%, up from 78% on Wednesday, according to the FedWatch barometer. However, they expect an increase of 25 basis points in July.
“There is a recognition that a pause does not mean the end (of the rate hike cycle),” said Kit Juckes, at Societe Generale, adding that traders are also questioning the long-established thesis that the Fed will stop raising rates long before the European Central Bank.
SURVEY-ECB expected to raise interest rates in June and July
In terms of sector performance in Europe, the Stoxx telecommunications index (-1.11%) showed the biggest decline, and that of cars the best gainer (+0.99%).
The Chinese Ministry of Commerce has announced the launch of a national campaign to encourage vehicle purchases. In Paris, Stellantis took 1.51% and Renault 1.09%.
RATES/CURRENCIES Bond yields are on the way down in the US, punished by the assumption of extended monetary policy tightening from the Fed. The ten-year fell five basis points to 3.7237%.
The ten-year Bund rate, the benchmark in Europe, fell to 2.42% at the end of the day.
In the foreign exchange market, the dollar lost 0.7% against a basket of currencies, allowing the euro to rise to 1.0777.
The main macro fact of the day went into recession in the euro area in the first quarter, according to final figures from Eurostat, which lowered the development of gross domestic product for this period to -0.1%, but also for the last three months of 2022.
The oil market rallied in response to a press report that Iran and the United States are closing in on an interim deal that would allow for the easing of sanctions against Tehran – particularly on crude oil exports – in return for a reduction in uranium enrichment activities.
Brent lost 1.7% to $75.64 a barrel. barrel and WTI 2.07% to $71.03.
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