by Laetitia Volga
PARIS (Reuters) – European stock markets ended higher on Thursday, benefiting from an easing of fears over the U.S. debt, the Chinese economy and speculation about a status quo from the Federal Reserve at its next meeting.
In Paris, the CAC 40 rose 0.55% to 7,137.43 points. The British Footsie took 0.59% and the German Dax 1.21%.
The EuroStoxx 50 index rose 0.94%, the FTSEurofirst 300 0.76% and the Stoxx 600 0.78%.
At the time of the close in Europe, Wall Street also moved up: the Dow Jones gained 0.2%, while the Standard & Poor’s 5000.6% and the Nasdaq Composite 0.8%.
After ending June in the red, global markets enter June with more enthusiasm thanks to positive progress on the US debt ceiling file, good statistics from China and hopes of a break in the Fed’s interest rate hikes.
However, the labor market is still showing signs of strength: The US private sector added 278,000 jobs last month, according to the ADP survey, while the Reuters consensus gave a figure of just 170,000.
Investors will follow Friday’s publication of the Ministry of Labour’s monthly report with interest. The Reuters consensus expects nonfarm payrolls to fall to 190,000 from 253,000 in April.
“Labor market conditions remain tight,” said Nancy Vanden Houten, chief economist at Oxford Economics. “While we expect the Fed to keep interest rates unchanged at its next meeting, more sustained easing of labor market conditions is needed to permanently rule out further hikes.”
On the European stock market, Remy Cointreau lost 5.01% as the spirits group maintained its outlook for 2023-2024 despite a stronger-than-expected rise in operating profit compared to the previous financial year.
Casino fell 9.43%, while the distribution group’s managing director was questioned by the finance brigade as part of an investigation into price manipulation and insider trading in particular.
Eurozone government bond yields ended lower for the fourth session in a row in response to the slowdown in inflation in several eurozone countries.
The ten-year German was trading around 2.25% at the end of the day.
In the US, the drop in interest rates was reinforced after the announcement of a drop in labor productivity during January-March and a sharp downward adjustment in unit labor costs over the last two quarters. The yield on 10-year government bonds fell three basis points to 3.6045%.
Reflecting interest rates, the dollar fell 0.68% against a basket of benchmark currencies as investors lowered their expectations of a US interest rate hike this month.
According to the FedWatch tool, markets are now pricing in about a 70% chance that the Fed will keep the federal funds rate target at 5%-5.25%.
The single currency was up 0.56% against the dollar at 1.0748.
Despite rising inflation in Europe, markets still expect the ECB to raise interest rates in June and July, according to Refinitiv.
The chairperson of the institution, Christine Lagarde, also emphasized that inflation remained too high, making further tightening of monetary policy necessary.
On the oil market, Brent rose 3.04% to $74.81 per barrel. barrel and US light crude oil (West Texas Intermediate, WTI) 3.6% to $70.54.
(Laetitia Volga, editing by Jean-Stéphane Brosse)
Copyright © 2023 Thomson Reuters