(Reuters) – European stocks ended in the red on Tuesday, amid concerns over the U.S. debt ceiling and ahead of key central bank decisions on raising interest rates.
In Paris, the CAC 40 ended down 1.45% at 7,383.20 points. The British Footsie lost 1.24% and the German Dax 1.23%.
The EuroStoxx 50 index ended the session down 1.53%, the FTSEurofirst 300 dropped 1.23% and the Stoxx 600 1.24%.
Investors are fleeing risk ahead of the release on Wednesday of the US Federal Reserve (Fed) and European Central Bank’s monetary policy decision on Thursday, which are expected to raise rates by a quarter point
As a preamble, the markets learned on Tuesday the first estimate of the rise in prices in April in the euro zone, which shows that underlying inflation recorded an unexpected slowdown, which could support a moderate rate hike by the ECB on Thursday. .
Eurozone banks further tightened access to credit in the first quarter, showing that higher borrowing costs are having an impact on the economy.
However, in a surprise move, Australia’s central bank surprised on Tuesday by raising its key interest rate by a quarter point and saying “further” tightening may be needed because inflation is too high. , while investors were anticipating a status quo.
Concerns over the US debt ceiling negotiations also urge caution, with the cost of default insurance in the US hitting new highs on Tuesday, when US Treasury Secretary Janet Yellen said the government could run out of cash to pay bills by June.
VALUES
Europe’s energy index posted the steepest drop in the Stoxx 600 at 4.52% on Tuesday as BP fell and oil prices retreated.
The oil group BP dropped 8.6% after announcing a share buyback program for a lower amount than the previous one
In Paris, the giant TotalEnergies ends on a drop of 5.07%
The European banking index .SX7P ended down 1.48%, despite the jump from HSBC (3.5%), the British bank having seen its profit triple over the first three months and announced the payment of a first quarterly dividend since 2019.
Sanofi fell 2.83% after Deutsche Bank’s downgrade to “sell”.
Electrolux for its part gained 5.6% in response to information from the Bloomberg agency according to which the Chinese Midea would be interested in the Swedish specialist in household appliances.
AT WALL STREET
At the close in Europe, the Dow Jones was down 1.49%, the Standard & Poor’s 500 was down 1.53% and the Nasdaq Composite was down 1.30%, as worries about the US debt ceiling eased. intensified and that the main American regional banks fell further on Tuesday following the bankruptcy of First Republic Bank.
THE INDICATORS OF THE DAY
The manufacturing sector in the euro zone contracted in April, but to a lesser extent than initially estimated, to 45.8 against 45.5 for the first estimate, according to the final results of the survey of purchasing managers. published Tuesday by S&P Global.
In France, activity in the manufacturing sector recorded a further contraction in April, due to the fall in new orders and the impact of protests against the pension reform, according to the results of the monthly S&P Global survey of purchasing managers.
In the United States, the Labor Department’s latest “Jolts” survey, released on Tuesday, shows job openings fell for the third consecutive month in March, while factory orders rose less than expected, while the manufacturing sector continued to suffer from high interest rates.
CHANGES
On the foreign exchange market, the euro rises slightly by 0.18% to 1.0996 dollars
The “dollar index”, which measures the variations of the greenback against a basket of currencies, is down 0.1%
RATE
Eurozone bond yields turned lower with the release of ECB figures on eurozone loan demand in the first quarter, an indicator released the day after JPMorgan announced a recovery in assets of First Republic, the latest sign of the pressures exerted on the banking sector.
The ten-year German Bund ended down more than 6 basis points at 2.255% while its two-year equivalent ended down 7 basis points at 2.658.
Yields on ten-year US Treasuries fell 13 basis points to 3.4352% after Monday’s jump.
OIL
Oil prices fell to their lowest level in five weeks on Tuesday, as concerns over a US default added to the contraction in China’s manufacturing PMI in April, as well as expectations of a rate hike.
Brent LCOc1 fell 4.02% to $76.12 a barrel and US light crude (West Texas Intermediate, WTI) CLc1 fell 4.27% to $72.43.
(Written by Diana Mandia)
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