by Claude Chendjou
PARIS (Reuters) – European stocks ended lower on Tuesday and two of Wall Street’s three main indices were also in the red for the last session of a month of February marked by renewed concerns about interest rates due to the persistence of inflation and the resilience of the economies.
In Paris, the CAC 40 ended down 0.38% at 7,267.93 points. The British Footsie lost 0.74% and the German Dax 0.11%.
The EuroStoxx 50 index lost 0.23%, the FTSEurofirst 300 0.27% and the Stoxx 600 0.32%.
Over the month as a whole, however, the CAC 40 gained 2.61% and the Stoxx 600 1.74%, thanks mainly to good corporate results in Europe.
On the other hand, investors were surprised in the United States by the strength of the labor market, the resilience of economic activity in view of the PMI indicators for February and the unexpected acceleration of the PCE price index in January, a preferred measure. inflation by the US Federal Reserve (Fed).
In Europe, inflation data released on Tuesday in France and Spain also showed an unexpected acceleration in February, to 7.2% and 6.1% respectively year on year, leading to an upward revision of expectations for key interest rates of the European Central Bank (ECB).
Markets now expect the ECB to raise rates by another 150 basis points by the end of the year, which would take the deposit rate to 4%.
In the US, traders are pricing a 23% chance of a 50 basis point Fed rate hike in March and expect rates to peak at 5.41% in September. BofA Global Research, for its part, sees this rate peaking at nearly 6%, compared to 4.50%-4.75% currently.
VALUES IN EUROPE
The banking compartment (+1.52%) posted the best performance of the Stoxx 600 with the rise in bond yields. Spanish bank Santander, which has announced plans to return half of its profits to shareholders over three years, climbed 4.82%.
In distribution, Casino fell 3.61% and Ocado plunged 12.16%, the former’s quarterly sales in France having disappointed, while the latter posted a stronger than expected annual loss, against a backdrop of high inflation.
Bayer, also affected by rising costs, fell 3.91%, especially as the group anticipates a drop in operating profit this year.
The Swiss interim giant Adecco fell 2.9% after saying it had seen signs of a slowdown in hiring since the start of the year.
AT WALL STREET
At the time of closing in Europe, the Dow Jones fell 0.48%, the Standard & Poor’s 500 0.10%, while the Nasdaq nibbled 0.04%.
The session was also marked by the rise in bond yields as Chicago Fed Chairman Austan Goolsbee, this year’s voting member of the US central bank’s monetary policy committee, is due to speak on Tuesday.
In values, the quarterly results of Target (+2.29%) are well received, as are the forecasts of Zoom Video Communications (+1.73%).
Norwegian Cruise Line, on the other hand, fell 11.51% as the cruise line forecast annual profit below market expectations.
THE INDICATORS OF THE DAY
Household consumption in France rebounded more than expected in January, by 1.5%, according to INSEE.
The US trade balance deficit widened in January by 2.0% to $91.5 billion, the Commerce Department said.
RATE
Supported by inflation data from France and Spain, the ten-year and two-year German Bund yields, benchmarks for the eurozone as a whole, ended up 4.8 basis points respectively, at 2.63%, and six points, to 3.12%.
In the United States, yields for these two maturities rose to 3.93% and 4.80% respectively.
CHANGES
The dollar is heading for its first monthly gain (+2.5%) since September against a basket of international currencies.
The euro is stable at $1.0606 (-0.01%) after gaining 0.6% on Monday, while the pound is trading at $1.21025 (+0.33%), continuing to benefit of the announcement on Monday evening of an agreement on the Northern Irish protocol.
OIL
Oil prices are supported by the prospect of a further improvement in manufacturing activity in China in February pending the official release of the PMI indices on Wednesday.
Brent rose 1.77% to 83.91 dollars a barrel and American light crude (West Texas Intermediate, WTI) by 2.4% to 77.5 dollars.
(Written by Claude Chendjou, edited by Bertrand Boucey)
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