by Claude Chendjou
PARIS (Reuters) – European stock markets ended lower on Friday and Wall Street was clearly in the red late morning in New York, as the rebound in consumer spending and the acceleration of inflation in the United States in January revived concerns about the evolution of interest rates.
In Paris, the CAC 40 ended down 1.78% at 7,187.27 points. The British Footsie lost 0.37% and the German Dax lost 1.72%.
The EuroStoxx 50 index fell by 1.86%, the FTSEurofirst 300 by 0.86% and the Stoxx 600 by 1.04%.
Over the week as a whole, the CAC 40 lost 2.18% and the Stoxx 600 1.42%, while the three main indices on Wall Street are also heading for a weekly decline, the fourth in a row for the Dow Jones.
Data released today by the Commerce Department showed consumer spending in the United States rose 1.8% in January after contracting 0.3% the previous month as the US Federal Reserve (Fed ) tries in vain to curb demand to curb high inflation.
In fact, the PCE inflation index included in this statistic also showed an acceleration over one month (+0.6%) and at an annual rate (+5.4%), while in its “core” version, the measure favored by the Fed, it came out respectively at +0.6% and +4.7% after +0.4% and +4.6% in December.
“This PCE number, which for me is a vital number, clearly suggests that the Fed still has work to do. We can now look at a probable hike (in interest rates) of half a point in March,” said Phil Blancato, managing director of Ladenburg Thalmann Asset Management.
Even before the publication of this statistic, stock market indices were already under pressure with statements by Joachim Nagel, a member of the European Central Bank (ECB), in favor of a sharp rise in rates beyond March, and the US Treasury Secretary Janet Yellen on still-high underlying inflation.
Added to macroeconomic concerns are geopolitical tensions with the entry into the second year of the war in Ukraine, the summit of finance ministers of the G20 countries and the sanctions being prepared by the G7 against Russia.
VALUES IN EUROPE
In Europe, practically all the major sectors ended in the red with a marked decline for the tourism and leisure compartment (-2.98%), whose demand could suffer from inflation.
A new series of results animated the exchanges, in particular in construction (-0.56%) where Saint-Gobain (+4.82%) resisted the downward trend thanks to the announcement of a figure of record business in 2022.
In the automotive sector, down 2.48%, the equipment manufacturer Valeo fell 9.13% after its results and forecasts, while in chemicals, BASF plunged 7.86%, after a warning on its annual profit and a suspension of its share buyback program.
AT WALL STREET
At the close in Europe, the Dow Jones fell 1.04%, the Standard & Poor’s 500 1.15% and the Nasdaq 1.67%.
All sectors of the S&P-500 are in the red, the technological compartment falling by 1.84% and that of consumption said to be non-essential by 1.80%.
Growth stocks like Tesla, Amazon, Apple or Nvidia, sensitive to rate variations, lost around 2%.
Boeing fell 4.68% after the Federal Aviation Administration (FAA) temporarily suspended deliveries of the 787 Dreamliner.
Sales of new homes in the United States rose in January by 7.2% to 670,000 units in seasonally adjusted annualized data, a ten-month peak, thanks to the drop in the median price.
The morale of American households has improved more than expected since the beginning of February with an index of 67.0, according to the final results of the monthly survey from the University of Michigan.
The German economy contracted more than expected in the last three months of 2022, by -0.4% against -0.2% announced in the first estimate.
Bond yields stretched on the prospect of a rise in the cost of credit: the ten-year German Bund gained more than five basis points, to 2.52%, and the two-year climbed 11.5 points , at 3.01%.
In the United States, those of ten-year and two-year Treasuries increased respectively by 7.6 basis points, to 3.95%, and 12.1 points, to 4.81%.
EXCHANGES The dollar appreciated by 0.6% against a basket of major international currencies, to a seven-week high after the statistics on US inflation.
The euro fell 0.5% to 1.0542 dollars.
The Japanese currency is trading at 136.37 yen per dollar (+1.24%), at a two-month low against the greenback, after statements deemed accommodating by the probable future governor of the Bank of Japan (BoJ), Kazuo Ueda, in front of the Parliament.
Oil prices are volatile, torn between fears over interest rates, rising crude inventories in the United States and the prospect of a drop in Russian crude exports in March.
At the close in Europe, Brent rose 1.05% to 83.07 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.19% to 76.29 dollars.
However, Brent has lost around 15% at this stage compared to the level reached when the war in Ukraine broke out a year ago. It then peaked at $128 on March 8, 2022.
TO BE FOLLOWED ON MONDAY:
THE MARKET SITUATION:
(Some data may show a slight shift)
THE FENCE IN
Indices Last Var. Var. %YTD
Eurofirst 300 1805.03 -20.64 -1.13% +7.54%
Eurostoxx 50 4178.82 -79.34 -1.86% +10.15%
CAC 40 7,187.27 -130.16 -1.78% +11.02%
Dax 30 15209.74 -265.95 -1.72% +9.24%
FTSE 7878.66 -29.06 -0.37% +5.73%
SMI 11181.77 -65.98 -0.59% +4.22%
The values to follow in Paris and in
THE TREND TO
Indices Last Var. Var. %YTD
Dow Jones 32777.15 -376.76 -1.14% -1.12%
S&P 500 3961.07 -51.25 -1.28% +3.17%
Nasdaq 11376.94 -213.46 -1.84% +8.70%
Nasdaq 100 11947.65 -232.49 -1.91% +9.21%
Minutes of the session on Wall
“The Day Ahead” – The point on the next
session on wall street [DAY/US]
Standby Price Var.% YTD
Euro/Dlr 1.0546 1.0595 -0.46% -1.46%
DLR/Yen 136.35 134.70 +1.22% +3.99%
Euro/Yen 143.82 142.70 +0.78% +2.51%
DLR/CHF 0.9395 0.9338 +0.61% +1.63%
Euro/CHF 0.9910 0.9892 +0.18% +0.17%
Stg/Dlr 1.1949 1.2013 -0.53% -1.22%
Index $ 105.2350 104.5980 +0.61% +9.42%
Gold Spot 1811.56 1822.64 -0.61% +19.42%
Last Var. Spread/Bund
Future Bunds 134.02 -0.64
10-year Bunds 2.54 +0.01
Bund 2 years 3.02 +0.00
10-year OATs 3.02 +0.01 +48.00
10-year Treasury 3.97 +0.09
Treasury 2 years 4.83 +0.13
Previous Price Var Var.% YTD
US light crude 76.34 75.39 +0.95 +1.26% +24.72%
Brent 83.08 82.21 +0.87 +1.06% +25.82%
(Written by Claude Chendjou, edited by Kate Entringer and Matthieu Protard)
Copyright © 2023 Thomson Reuters
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.