by Diana Mandia

(Reuters) – European stocks ended sharply higher on Monday ahead of the release later in the week of U.S. inflation data, a key gauge that should shed some light on the path of central bank interest rates as they move forward. fight against soaring prices.

In Paris, the CAC 40 ended up 1.11% at 7,208.59 points, the British Footsie rose by 0.83% and the German Dax by 0.58%.

The EuroStoxx 50 index rose by 1.03%, the FTSEurofirst 300 by 0.95% and the Stoxx 600 by 0.9%.

U.S. consumer price data, due on Tuesday, will be closely scrutinized amid uncertainty over Federal Reserve (Fed) monetary policy, after several U.S. central bank officials showered the hope that the institution’s monetary tightening cycle will end soon.

Economists polled by Reuters on average expect US inflation to accelerate to 0.5% over one month in January after falling 0.1% the previous month.

Michelle Bowman, a member of the Fed’s Board of Governors, said on Monday that the central bank should continue to raise interest rates to bring them to a level high enough to bring inflation back to the target rate. .

“I expect us to continue to raise the fed funds rate because we need to get inflation back to our 2% target, and to do that we need to better balance supply and demand,” he said. she said at an American Bankers Association conference in Florida.

THE INDICATORS OF THE DAY

In Europe, the European Commission on Monday raised its growth forecast for 2023, which should reach 0.9%, and forecasts a more marked slowdown in inflation towards the end of the year.

Rising prices will weigh on public finances over time, however, a study by the European Central Bank (ECB) said on Monday, with the energy crisis, slowing growth and rigid spending rules having already affected the situation. government budgets after a year of high inflation.

Gross domestic product (GDP) in the euro zone expected on Tuesday, retail sales in the United States and inflation in the United Kingdom expected on Wednesday are also on the program for a week full of first-rate economic indicators.

VALUES

In values, Thales, which posted one of the strongest increases in the CAC 40 on Monday, rose 2.45% and Saab 7.36% after India announced it wanted to more than triple its annual exports of products. defense to reach $5 billion by 2024/25.

Airbus for its part ended up 1.6% after information from Reuters according to which Air India has sealed a historic order with the European aircraft manufacturer and its American rival Boeing for more than 100 billion dollars at list price.

In Paris, the Ehpad Orpea group erased the gains recorded at the start of the session to end down 16.29%, the company having specified that the nominal value of its share should be reduced to 0.20 euros after the increases. of capital planned as part of its financial restructuring.

AT WALL STREET

As Europe closes, Wall Street is trading higher, led by gains in tech stocks and falling Treasury yields, with the Dow Jones gaining 0.91%, the Standard & Poor’s 500 0.95% and the Nasdaq Composite 1.40%.

Meta, the parent company of Facebook, rose 3.1% after reports from the Financial Times that the group is preparing new job cuts.

CHANGES

The greenback fell 0.27% against a basket of benchmark currencies as risk appetite returned, while the euro rose 0.35% to $1.0712 after hitting a low five weeks at the very beginning of Monday’s session.

The yen fell 1% against the dollar to 132.72 yen, traders revising their expectations on the political orientation of Kazuo Ueda, tipped to become the next governor of the Bank of Japan. The appointment of Haruhiko Kuroda’s successor is scheduled for Tuesday.

RATE

The yield on ten-year US Treasury bonds, which hit its highest level in six weeks on Monday, is now down almost two basis points to 3.72% at the close of trading in Europe.

Its German equivalent lost 0.4 basis points to 2.373%, after climbing more than 17 basis points last week.

OIL

Demand concerns are dragging oil prices down on Monday, which jumped on Friday when Russia announced a 5% daily output cut in March.

Brent fell 0.23% to $86.19 a barrel, and US light crude fell 0.16% to $79.59 a barrel.

“Crude prices are weakening as energy traders price in a potential weakening crude demand outlook as a crucial inflation report could force the Fed to tighten policy much more aggressively,” he said. Edward Moya, analyst at OANDA.

“This week could be a watershed moment in Wall Street’s assessment of the severity of the recession,” he added.

(Diana Mandiá, edited by Blandine Hénault)

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