by Claude Chendjou
PARIS (Reuters) – The main European stock markets ended on a stable note on Monday and on Wall Street, caution dominated for two of the three indices after an activity indicator in the United States which revived fears of an economic recession.
In Paris, the CAC 40 nibbled 0.05% to 7,418.21 points. The German Dax gained 0.02%. The British Footsie advanced more frankly, by 0.3%, thanks in particular to the values of raw materials such as Anglo American (+ 1.81%) or Glencore (+ 1.13%).
The EuroStoxx 50 index, on the other hand, lost 0.03%, while the FTSEurofirst 300 gained 0.23%. The Stoxx 600 pared its closing gains to 0.25% after hitting a two-week high in the session.
Equity markets, which moved in the morning in the green in the absence of new catalysts, gave up much of their gains after the publication of the statistics of manufacturing activity in the New York area, which has showed a contraction of the Empire State index to -31.8 in May after +10.8 the previous month and a consensus of -3.75.
“What we are seeing is a sign of concern about the strength of the economy, which may be in danger of entering a recession sooner than expected,” commented Robert Pavlik, portfolio manager at Dakota Wealth.
This statistic is in addition to Friday’s on US consumer confidence which showed a deterioration in household morale in May to the lowest since November, the Michigan index having come out at 57.7 after 63.5 in April.
U.S. retail sales data for April, due on Tuesday, may provide a clearer picture of economic developments as fears of a rapid rate hike may or may not be bolstered by comments expected this week from several US Federal Reserve (Fed) officials.
The president of the Atlanta branch of the U.S. central bank, Raphael Bostic, said on Monday that he does not expect interest rates to fall this year and that on the contrary, perhaps they should be raised. His Minneapolis counterpart, Neel Kashkari, said the Fed still had work to do, with the labor market still “overheated” and inflation “far too high.”
In Europe, the European Central Bank (ECB) has indicated in a study that the impact of its monetary tightening on inflation will not be fully felt until 2024, while the European Commission has raised its inflation forecast to 5.8% in 2023 and 2.8% in 2024. The EC growth forecast has been revised for 2023 to 1.1% and to 1.6% for 2024.
Industrial production in the euro zone fell more than expected in March, by 4.1% over one month and 1.4% over one year, according to Eurostat.
VALUES IN EUROPE
The basic resources compartment (+1.21%), driven in particular by fears over supply, recorded one of the best performances of the Stoxx 600, alongside defensive stocks.
In Paris, Alstom finished in the lead with a gain of 5.23%, benefiting in particular from an increase in the price target. Conversely, LVMH, down 0.48%, weighed on the CAC 40.
On the business side, Axa gained 2.43% after reporting higher-than-expected financial solvency in the first quarter, while Siemens Energy advanced 2.46% after raising its sales outlook. for this year.
The Spanish bank BBVA, particularly exposed to Turkey, lost 4.18% the day after the Turkish presidential election marked by uncertainty over the second round which will oppose Recep Tayyip Erdogan to Kemal Kiliçdaroglu.
AT WALL STREET
At the time of the close in Europe, the Dow Jones fell 0.1%, while the Standard & Poor’s 500 nibbled 0.03% and the Nasdaq 0.42% as the negotiations scheduled for Tuesday between Democrats and Republicans on the US debt ceiling, are fueling cautious optimism.
Technology stocks, whose index rose by 0.43%, are driven by cheap purchases. Tesla is stable as his boss Elon Musk participates in the “Choose France” summit in Versailles on Monday after a meeting with Emmanuel Macron at the Elysee Palace.
Meta Platforms (+2.26%) benefited from the increase in Loop Capital’s recommendation to “buy”.
Alibaba, Baidu and JD.com, up 2.67% to 5.79%, are buoyed by hopes of further stimulus measures in China.
On the downside, Oneok fell 9.34% after the announcement of the takeover of the oil pipeline operator Magellan Midstream Partners (+ 13.38%) for around 18.8 billion dollars.
CHANGES
Penalized by the Empire State index, the dollar fell 0.22% against a basket of benchmark currencies after hitting a five-week peak at 102.75 points.
The euro rose to 1.0871 dollars (+0.21%).
The Turkish lira is trading at 19.67 to the dollar, heading for its worst performance since early November, in reaction to the Turkish presidential results.
RATE
Ten-year and two-year German Bund yields ended up 4.3 points and 2.5 basis points respectively, at 2.304% and 2.641%, as money markets anticipate a spike in the German deposit rate. ECB at 3.7% against 3.25% currently.
The ten-year Treasuries yield rose 4.1 basis points to 3.5056%, while the two-year yield was stable at 3.9978%.
OIL
The oil market is benefiting from signs of supply tensions resulting from the reduction in production by OPEC and its allies: Brent crude takes up 1.71% to $75.44 a barrel and American light crude (West Texas Intermediate, WTI) 1.8% to $71.3.
(Written by Claude Chendjou, edited by Tangi Salaün)
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