by Claude Chendjou
PARIS (Reuters) – European stock markets, apart from London, ended on Tuesday weighed down by risk aversion as the Bank of Japan (BoJ) surprised markets by allowing a small rise in its interest rates, while in New York, it resisted two of the three main indices the downward trend in the middle of the session, thanks in particular to the progress in the energy and financial sectors.
In Paris, the CAC 40 ended down 0.35% to 6,450.43 points. The German Dax lost 0.42 per cent. The UK Footsie, on the other hand, rose 0.13%, thanks in particular to energy shares.
The EuroStoxx 50 index fell by 0.23%, the FTSEurofirst 300 by 0.36% and the Stoxx 600 by 0.4%.
The BoJ, which has been engaged in a fight against deflation since 2013, surprised markets by announcing at the end of its two-day monetary policy meeting that it would allow an upward swing in the interest rate of its ten-year bond to a maximum of 0.5% against a previously set ceiling of 0.25%.
This decision, even measured, is seen by analysts as the beginning of a gradual abandonment of the Bank of Japan’s ultra-accommodative policy, whose strategy is at odds with that of the other major central banks, which have since the end of the peak of the COVID-19 crisis , sustained monetary policy tightening to curb persistent inflation.
In financial markets, the benchmark Nikkei index fell 2.46%, the lowest since Oct. 13, and the yield on 10-year bonds hit a high since 2015 at 0.47%, very close to the BoJ’s new implicit ceiling.
Bond yields in Europe and the US followed suit: the 10-year German Bund ended up 10.1 points to 2.29%, the fifth straight session of gains.
Its US equivalent of the same maturity was shown at the close of the stock markets in Europe at 3.XX%, an increase of X points, while the money markets, with a probability of 61%, estimate a rate hike by the Fed in February by 25 basis points to 4, 5%-4.75%, before a peak in credit costs of 4.9% in May 2023.
BY WALL STREET
At the close in Europe, the Dow Jones rose 0.14%, while the Standard & Poor’s 500 was largely unchanged and the Nasdaq lost 0.15%.
The positive trend is driven by energy (+1.39%) and financial indices (+0.61%), with the former benefiting from a fall in the dollar and the latter from the continued rise in bond yields.
In shares, Tesla, which ended in the red on Monday, fell another 5.24% after the automaker’s price target was cut to a range of $177 to $285 by several brokers amid concerns. Investors also fear that Elon Musk, CEO of Tesla, pays too much attention to Twitter to the detriment of the management of the car group.
Nike was down 0.97% ahead of its quarterly earnings after the close.
Wells Fargo fell 1.32% following a $3.7 billion fine imposed by the Consumer Financial Protection Bureau (CFPB), the US federal consumer protection agency, for mismanagement.
VALUES IN EUROPE
In Europe, automotive (-1.44%), tourism (-0.64%), real estate (-2.15%) and new technologies (-1.21%) were among the sharpest decliners on fears of a recession and a sustained rise in interest rates.
On the other hand, the prospect of a rise in credit costs dragged down banks, whose index rose 1.65%, the best performer of the Stoxx 600.
In individual values, Elior gained 3.87% following the announcement of the signing of a protocol for the acquisition of the Multiservices division by its main shareholder Derichebourg (-1.56%).
Engie, urged by Belgian authorities to increase its nuclear supplies by 3.3 billion euros, lost 3.30%.
Orange lost 0.97% following the announcement of the departure of its CFO, Ramon Fernandez, scheduled for the end of the first quarter of 2023.
In the foreign exchange market, the US currency hit a low against the Japanese currency at 131.01 yen per dollar following the announcements from the BoJ against 136.89 at the opening of trade.
Against a basket of benchmark currencies, the dollar lost 0.69%, while the euro rose 0.23% to $1.0629.
Oil prices are volatile due to a weaker dollar and an increase in contamination cases related to the COVID-19 epidemic in China.
At the close of trade in Europe, Brent fell 0.66% to $79.27 a barrel. green.
(Written by Claude Chendjou, edited by Jean-Stéphane Brosse)
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