by Laetitia Volga

PARIS (Reuters) – European stock markets ended in the green on Friday, as strong results from U.S. banks and the prospect of a pause in the cycle of Federal Reserve (Fed) rate hikes helped the Stoxx 600 reach a peak of over a year.

The CAC 40 (+0.52%) is not to be outdone in terms of record since the flagship index of the Paris Stock Exchange registered a new absolute high at 7,533.41 points and closed at 7,519.61.

Britain’s Footsie gained 0.36% and Germany’s Dax advanced 0.5%.

The EuroStoxx 50 index ended up 0.63%, the FTSEurofirst 300 0.49% and the Stoxx 600 0.58%.

The latter recorded its fifth consecutive session in the green to close at 466.91 points, after a highest since February 2022 at 468.05.

The renewed appetite for risk that has been driving the markets for several days is largely explained by the prospect that the Fed could stop raising its interest rates from June, then even start a cut by now. the end of the year.

This scenario, to which many investors are attached, was fueled by the announcement this week in the United States of the slowdown in consumer prices, the unexpected drop in producer prices and an increase in unemployment claims.

Among the statistics of the day, retail sales fell more than expected last month in the United States, which raises concerns about the evolution of the economy.

“Recession risks are rising and inflationary pressures are moderating, which we believe will cause the Fed to reverse course in the fourth quarter,” said James Knightley, chief economist at ING.

Fed Governor Christopher Waller, however, stressed that there was still some way to go to bring inflation back to target and that maintaining tight monetary policy would take longer than markets expected.

WALL STREET

By the time of the European close, major Wall Street indices were down 0.3% to 0.6% as disappointing retail sales figures overshadowed better-than-expected results from a trio of banks.

JPMorgan climbed 7.21%, Citigroup 2.96% and Wells Fargo nibbling 0.1% after all three posted quarterly earnings above expectations, signaling the resilience of their businesses despite the crisis in the world. sector in March.

VALUES

European banks benefited from the good performance of their American competitors. In Paris, Crédit Agricole, BNP Paribas and Société Générale took from 2.30% to 3.63%. The sector index (+3.04%) posted the biggest increase of the day.

The day after the good reception reserved for the quarterly sales of LVMH, the publication by Hermès of an increase in turnover above expectations was greeted by a gain of 1.52% in its share price.

The action of the saddler reached a new peak, at 1,984.60 euros, as did LVMH (+ 1.01%) at 894.90.

Alstom fell 3.01% after the announcement of the departure of its chief financial officer and a lowering of advice from Deutsche Bank to “keep”.

On the M&A side, Dechra soared 33.07% as the British veterinary pharmaceuticals maker said it was in talks with fund EQT for a possible £4.63 billion takeover bid ( €5.23 billion).

RATES/EXCHANGES

In the bond market, yields on European government bonds ended higher on the idea that the European Central Bank would continue its monetary tightening longer than the Fed.

The ten-year-old German posted its highest level since mid-March at 2.432%.

In the United States, the yield on ten-year Treasuries rose to more than 3.5%.

The dollar is heading for another weekly decline as traders expect an imminent end to the Fed’s rate hike cycle.

OIL

Oil prices are rising as the International Energy Agency (IEA) said it expects global demand to hit a record high this year as Chinese consumption picks up.

Brent gained 0.38% to 86.42 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.6% to 82.65 dollars.

(Laetitia Volga, edited by Blandine Hénault)

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