PARIS (Reuters) – The main stock markets in the euro zone ended lower on Wednesday, after mixed activity indicators for the services sector, in Europe and the United States, which fuel fears of a recession and uncertainties over the trajectory of monetary policies.
In Paris, the CAC 40 lost 0.39% to 7,316.3 points and the German Dax dropped 0.53%.
The UK Footsie bucked the broader trend and gained 0.37% as S&P Global’s UK survey showed the strongest growth in new services orders for a year.
The EuroStoxx 50 index fell 0.39%, the FTSEurofirst 300 fell 0.11% and the Stoxx 600 0.16%.
At the time of closing in Europe, the Dow Jones took 0.12% but the Standard & Poor’s 500 fell by 0.45% and the Nasdaq by 1.34%.
The PMI and ISM indicators published during the day showed that the economy remained resilient, with growth in activity in services which, however, proved to be quite uneven in the euro zone and weaker than expected in the United States.
In the aftermath of the publication of the “Jolts” report on job openings in the United States, the ADP survey also showed that the job market was marking time, with the number of jobs created last month falling significantly more than expected.
While weak macro data argues for a pause in central bank monetary tightening, it also raises concerns about the health of the economy.
“Investors are realizing that with ADP and the possibility of official US jobs numbers coming in lower than expected (to be released Friday), the economy is indeed slowing and the Fed will only need a only additional rate hike, if any,” said Sam Stovall, chief strategist at CFRA Research. “At the same time, investors are watching the situation closely to make sure we don’t fall into a deep recession.”
Adding to these concerns, the central bank of New Zealand surprised during the day by raising its interest rates more than expected because of the still too high level of inflation.
VALUES
In values, Sodexo jumped 11.30% after announcing a split in its Benefits & Rewards Services (BRS) business and raising its forecast for this year.
Nexans lost 7.08%, its largest shareholder, Invexans, having sold 9.6% of the capital of the French group at a price of 80 euros per share, a discount of 9.4% compared to the closing on Tuesday.
CHANGES
On the currency market, the dollar rose a little (+0.16%) after hitting a two-month low on Tuesday against a benchmark basket. But the trend remains unfavorable for the greenback as the scenario of a pause in Fed rate hikes becomes more plausible after the statistics of the last few days.
According to CME Group’s Fedwatch tool, traders estimate a near 60% chance of a Fed status quo in May.
The euro, on the contrary, fell to 1.0915 dollars (-0.34%).
RATE
The yield on ten-year US Treasuries is hovering around 3.29%, down five basis points.
In Europe, the ten-year German ended down at 2.181%, the lowest in more than a week.
OIL
Oil prices edged lower as the market weighed the deteriorating economic outlook against expectations of lower US crude inventories and lower supply from OPEC+.
Brent fell 0.14% to 84.82 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.38% to 80.4 dollars.
(Written by Blandine Hénault and Laetitia Volga, edited by Jean Terzian)
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