(Reuters) – European stocks ended higher on Tuesday as U.S. inflation showed a stronger-than-expected slowdown in May and bolstered hopes of a pause in the Federal Reserve’s (Fed) monetary tightening cycle.
In Paris, the CAC 40 ended up 0.56% at 7,290.8 points, while the British Footsie ended with a gain of 0.32% and the German Dax of 0.83%.
The EuroStoxx 50 index gained 0.72%, the FTSEurofirst 300 0.65% and the Stoxx 600 0.55%.
The sharper-than-expected slowdown in US inflation, the most anticipated statistic in this week’s program, bolstered market sentiment on a Fed dovish on interest rates following its March meeting. two days Wednesday.
Consumer price inflation slowed more than expected in the United States in May, both month-on-month (+0.1%) and year-on-year (+4%), while so-called core inflation ( “core CPI”), which excludes volatile elements, came out up 0.4%, in line with estimates.
The year-on-year price increase was the smallest since March 2021.
Against this backdrop, market expectations for a pause in the Fed’s interest rate hike in June climbed to around 95% from around 75% before the data was released.
“Unlike the jobs picture, which continues to defy expectations, inflation numbers are in line with forecasts,” said Brian Jacobsen, chief economist at Annex Wealth Management.
The European Central Bank (ECB) is expected to raise rates by 25 basis points on Thursday, while the Bank of Japan is expected to maintain its ultra-loose policy after its meeting on Friday.
VALUES
The CAC 40 was supported by Téléperformance (+3.8%), at the top of the index, and by Saint Gobain (+3.1%), the latter having announced on Monday an agreement to acquire Building Products of Canada.
On the SBF 120, Verallia (-6%) suffered from the drop in Berengerg’s recommendation to “hold” against “buy”.
The European tech sector (+1.54%), in the wake of the surge in Oracle, posted one of the best performances of the Stoxx 600, behind basic resources (+2.72%), which benefited from the rise in metal prices after China cut its short-term interest rate.
Elsewhere in Europe, Hexagon gained 3.9%, buoyed by news of a collaboration with chipmaker Nvidia.
AT WALL STREET
At closing time in Europe, the Dow Jones took 0.48%, the Standard & Poor’s 500 0.70% and the Nasdaq Composite 0.75%.
The S&P 500 and Nasdaq hit 1-year highs on Tuesday after the release of US inflation figures, while Oracle climbed 2.2% and hit a new all-time high thanks to its quarterly results better than expected.
THE INDICATORS OF THE DAY
In addition to US inflation, investors learned on Tuesday that the German statistics institute had confirmed its first estimate of a rise in consumer prices of 6.3% over one year in May.
In Spain, inflation reached 3.2% year on year in May, its lowest level since July 2021, while food inflation, at 12% year on year, continues its downward trend.
CHANGES
The dollar gave up 0.35% against a basket of benchmark currencies after the inflation figures and the euro took advantage of this to gain 0.31% to 1.079 dollars.
The pound sterling GBP= advanced 0.77% to 1.26 dollars, boosted by the unexpected strength of the labor market in the United Kingdom, which is fueling expectations of further monetary tightening by the Bank of England.
RATE
In Europe, sovereign bond yields ended higher after falling with the publication of US inflation. The yield on the German two-year Bund ended up six basis points higher at 3.03%, while its ten-year counterpart rose more four points to 2.42%. The yield on ten-year Treasuries deepened its decline after the publication of US inflation before regaining ground. At the time of the close in Europe, it gained more than two basis points to 3.78% after having fallen as low as 3.68% earlier in the session.
OIL
Oil prices rose on Tuesday after their plunge the day before, but investors remained cautious ahead of central bank decisions and weak Chinese economic data.
Brent gained 3.02% to $74.01 a barrel and US light crude (West Texas Intermediate, WTI) gained 3.01% to $69.14 a barrel.
TO BE FOLLOWED ON WEDNESDAY:
The global tech fair VivaTech opens its doors Wednesday in Paris until Friday.
(Written by Diana Mandiá, edited by Blandine Hénault)
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