by Claude Chendjou
PARIS (Reuters) – European stock markets ended sharply lower on Thursday and Wall Street was also in the red mid-session amid rising bond yields, the latest macroeconomic indicators, particularly U.S. employment, arguing for further tightening of central bank monetary policy.
In Paris, the CAC 40 ended down 3.13% at 7,082.29 points, the biggest drop since March 15. The UK Footsie fell 2.17% and the German Dax lost 2.57%.
The EuroStoxx 50 index fell by 2.93% and the FTSEurofirst 300 by 2.44%. The Stoxx 600 fell 2.34%, the biggest drop since March 13 during the latest banking crisis.
Already under pressure following the publication of the minutes of the latest monetary policy meeting of the US central bank, which suggested further rate hikes, short-term government bond yields in Europe returned to their highest levels since the 2008 financial crisis on Thursday.
They were boosted by expectations of prolonged monetary policy tightening, the resilience of the US labor market in light of the ADP survey on private sector job creation, which provided arguments that the Fed could raise its interest rates, whose current target is 5.00%-5, 25%.
Dallas Fed President Lorie Logan, a voting member of the U.S. central bank’s FOMC, said Thursday “it would have been perfectly appropriate” to raise interest rates at the June meeting where it was finally decided.
For Randy Frederick, director of trading and derivatives at Charles Schwab, the 497,000 job creation figure in June published by ADP, nearly double what was expected, potentially implies more rate hikes are on the way.
The two-year German government bond yield, a benchmark for the entire euro area, thus peaked at 3.393%, surpassing the previous peak reached during the banking crisis in March, to establish a 15-year record.
In the US, same-maturity Treasuries jumped 10.1 basis points to 5.0543% at the close in European equities, while money markets now count on a 95% probability of a rise. quarter point in Fed rates this month versus a 90.5% chance the day before, according to CME Group’s Fed Watch barometer.
Signs of nervousness, the index measuring volatility in the United States rose 17.06% to 16.6 points, while its European equivalent ended up 25.72% to 19.22 points.
VALUES
The European luxury (-3.40%) and new technology (-2.99%) sectors, exposed to tensions between the US and China, continued to suffer from Beijing’s decision to impose restrictions on the export of metals used to make semiconductors as US Treasury Secretary. Secretary Janet Yellen arrived in China on Thursday for a four-day visit.
In individual values, Publicis shares, which were volatile during the session on information of possible interest from Vincent Bolloré, ended down 1.93%.
Embracer’s fundraising in a reduced share offering was sanctioned with the stock falling 13.78%.
BY WALL STREET
At the close in Europe, the Dow Jones fell 1.33%, the Standard & Poor’s 500 1.15% and the Nasdaq 1.34%.
The 11 major sectors in the S&P-500 are in the red, with technology stocks (-0.81%) showing one of the biggest declines.
Resisting the downward trend, Meta Platforms is generally stable (-0.19%) the day after the launch of Threads, an application intended to compete with Twitter, on which 30 million people have already registered according to Mark Zuckerberg.
TODAY’S INDICATORS
The ISM services index in the US came out to 53.9 in June against 50.3 a month earlier, under the influence of a recovery in new orders despite the Fed’s attempts to curb demand.
Retail sales in the euro area remained in May at the same level as in March and April, according to Eurostat data.
Industrial orders in Germany rose much more than expected in May, by 6.4% month-on-month, after a relatively stable April, data from the Federal Statistical Office showed.
CHANGES
Faced with a basket of reference currencies, the dollar (-0.09%) at the close of markets in Europe erased practically all its losses on the morning after the publication of the ADP survey on US employment.
The euro is shown at $1.0867 (+0.15%) and the pound sterling at $1.2711 (+0.06%).
OIL
The prospect of another US interest rate hike is weighing on the oil market, which could lead to a recession and a drop in demand: Brent falls 1.17% to $75.75 a barrel. barrel and US light (West Texas Intermediate, WTI) 1.09% to $71.01.
(Written by Claude Chendjou, edited by Jean-Stéphane Brosse)
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