by CORENTIN CHAPPRON
PARIS (Reuters) – European stock markets ended lower on Monday as economic data confirmed that economic activity was slowing in the euro zone and the United States under pressure from central banks’ monetary tightening.
In Paris, the CAC 40 lost 0.18% to 7,386.7 points, the German Dax fell 0.41% and the UK Footsie lost 0.06%.
The EuroStoxx 50 index ended the session down 0.02%, the FTSEurofirst 300 down 0.23% and the Stoxx 600 down 0.21%.
Activity data released on Monday confirmed that the slowdown in inflation is likely to come at the expense of growth.
Manufacturing activity continues to fall in Europe, PMI indicators showed, while the ISM manufacturing index surprised with its weakness in the United States.
As activity slows, investors no longer expect a pause or even a cut in Fed rates, with the terminal rate expected by markets to return to their highest levels since March, according to Fedwatch data.
The US economic indicators due this week, which will focus on the labor markets and the services ISM, will be key in assessing the path of monetary policy, pushing investors to be cautious.
“The ISM index indicates that the sector is in recession, while (…) services face many headwinds, including the resumption of student loan repayments (which will limit consumers’ disposable income)”, explains strategist ENG.
ING reminds that the deterioration of ISM data is a leading indicator of recession.
Casino, down 3.3%, was the worst performer of the SBF120, although the title capped the breakout after losing up to 20% earlier in the session. The group said on Monday that in the coming days it will ask the commercial court for “grace periods” to avoid defaulting on its debt during the settlement period with its creditors.
CGG rose 5.6% to top the SBF120 after the French geophysical services company announced that its subsidiary Sercel had won contracts in the Middle East.
Atos (+0.96%) announced on Monday that it had entered into exclusive negotiations with Schneider Electric (-1.96%, at the bottom of the CAC 40) for the sale of EcoAct and all its subsidiaries, an operation that will be able enable it to complete its program of disposal of non-strategic assets.
AstraZeneca (-8%) fell after publishing results of a lung cancer therapeutic trial considered disappointing.
The announcement of a drop in the supply of Russian and Saudi oil in August supported the oil and gas sector (+1.6%), while TotalEnergies in Paris rose 1.8%.
BY WALL STREET
US markets move on small variations as the session will be shortened and the holiday Tuesday for Independence Day.
At the close in Europe, the Dow Jones was up 0.17%, while the Standard & Poor’s 500 was up 0.06% and the Nasdaq Composite was down 0.02%.
The prospect of a recession was not enough to push down interest rates, which rose again on expectations of higher terminal rates.
On both sides of the Atlantic, politically sensitive short-term interest rates remain at their highest since the banking crisis in March. The 2-year U.S. Treasury yield rose nearly five basis points to 4.9232%, and the 2-year Bund yield ended at 3.328%, up six basis points.
The interest rate on the ten-year German government bond rose five basis points to 2.44 per cent.
Weak activity data is putting pressure on the dollar, which remains broadly flat against a basket of benchmark currencies.
The euro rose against the dollar to $1.0918 (+0.08%), while the British pound lost 0.10% to $1.2692.
Concerns about growth in developed countries limited gains in oil markets, supported by Russian and Saudi production cuts announced in August.
During a fleeting session,
Brent rose 0.37% to $75.71 a barrel and U.S. West Texas Intermediate (WTI) rose 0.33% to $70.92
(Reporting by Corentin Chapron, editing by Blandine Hénault)
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