by Claude Chendjou

PARIS (Reuters) – European stock markets ended a cautious session down on Monday marked by the absence of investors on Wall Street and pending the hearing on Wednesday of Jerome Powell, the Chairman of the Fed, before the American Congress. .

In Paris, the CAC 40 ended down 1.01% at 7,314.05 points. The British Footsie lost 0.71%. The German Dax, which hit a record high of 16,427.42 points on Friday, fell 0.96%.

The EuroStoxx 50 index fell by 0.74%, the FTSEurofirst 300 by 1.04% and the Stoxx 600 by 1.02%.

The New York Stock Exchange remained closed for an extended weekend due to “Juneteenth”, commemorating the abolition of slavery.

In Europe, investors remained focused on interest rates as the Bank of England meets on Thursday and across the Atlantic, Jerome Powell is due to speak to US lawmakers on Wednesday and Thursday a week after the decision to the central bank to observe a pause on its rates this month but to raise them from July. Several members of the Fed are also due to intervene this week.

In the euro zone, Peter Kazimir and Philip Lane, two officials of the European Central Bank (ECB), pleaded on Monday for the continuation of monetary tightening after the rate hike of 25 basis points decided last week by the Frankfurt institution. .

The session was also buoyed by hopes for a warming of relations between the United States and China, with Chinese President Xi Jinping hailing “progress” on Monday during a meeting with the Secretary of State. American State, Antony Blinken, visiting Beijing. China’s economy remains a concern, however, with Goldman Sachs on Sunday lowering its forecast for the country’s GDP growth for this year to 5.4% from 6.0% previously as the market still awaits further support measures from the authorities. Chinese.

VALUES

Apart from banks (+0.03%), all the major sectors on the European coast ended in the red, with chemicals showing the largest drop (-2.8%) with in particular Air Liquide (-3.83%) and BASF (-3.58%), victims of profit taking after Friday’s sharp rise.

The luxury sector (-1.43%) and the basic resources sector (-2.2%), exposed to China, also lost ground.

In corporate news, Airbus ended in the green after a record order of 500 planes from Indian airline IndiGo. Safran, up 1.73%, also benefited from order announcements at the Paris Air Show.

Sartorius Stedim Biotech fell 12.8% due to a ‘profit warning’, while Orange ended down 0.64% as a source reported that the European regulator should have reservations about the proposed merger with Masmovil.

RATE

Reflecting fears of continued monetary tightening, bond yields in the euro zone ended up as the market now expects the ECB’s deposit rate to peak at 4%.

Ten-year and two-year German Bund yields rose 5.4 points and 4.2 basis points, respectively, to 2.51% and 3.21%.

The yield on British two-year bonds has crossed the 5% threshold for the first time since 2008, with the markets now anticipating with a probability of more than 50% a BoE terminal rate of 6% by February 2024.

CHANGES

The dollar, which fell to a one-month low on Friday, gained 0.21% against a basket of international currencies.

The euro is displayed at 1.0921 dollars, close to a one-month peak.

The pound is trading at $1.27945, close to a 14-month high against the greenback as a 25 basis point rate hike by the BoE on Thursday seems all but a given.

OIL

Oil is affected by fears over China which take precedence over the upcoming cut in OPEC production.

“The (Chinese) economy is sailing through strong headwinds,” said Tamas Varga, oil analyst at PVM. “The real estate market has not recovered from last year’s slump, and in May retail sales and industrial production were below expectations,” he added.

Brent fell 0.63% to 76.13 dollars a barrel and US light crude (West Texas Intermediate, WTI) 0.89% to 71.14 dollars.

(Written by Claude Chendjou, edited by)

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