by CORENTIN CHAPPRON

PARIS (Reuters) – European stock markets ended lower on Monday, as economic data confirmed that economic activity was slowing in the euro zone and the United States under pressure from central bank monetary tightening.

In Paris, the CAC 40 lost 0.18% to 7,386.7 points, the German Dax fell 0.41% and the British Footsie lost 0.06%.

The EuroStoxx 50 index ended the session down 0.02%, the FTSEurofirst 300 fell 0.23% and the Stoxx 600 0.21%.

Activity data released on Monday confirmed that the slowdown in inflation is likely to come at the cost of growth.

Manufacturing activity continues to contract in Europe, PMI indicators showed, while the ISM manufacturing index surprised with its weakness in the United States.

As activity slows, investors no longer expect a pause or even a cut in key Fed rates, with the terminal rate expected by markets returning to their highest levels since March, according to Fedwatch data.

The US economic indicators due this week, which will focus on the labor markets and the services ISM, will be key to assessing the trajectory of monetary policy, which is prompting investors to be cautious.

“The ISM index indicates that the sector is in recession, while (…) services are facing many headwinds, including the resumption of student loan repayments (which will limit the disposable income of consumers)”, explain the strategists ENG.

ING recalls that the deterioration of ISM data is a leading indicator of recession.

VALUES

Casino, down 3.3%, posted the worst performance of the SBF120 even if the title limited the breakage after having lost up to 20% earlier in the session. The group said Monday that it would request in the coming days “grace periods” from the commercial court in order to avoid default on its debt during the conciliation period with its creditors.

CGG rose 5.6%, topping the SBF120, after the French geophysical services company announced that its subsidiary Sercel had won contracts in the Middle East.

Atos (+0.96%) announced on Monday that it had entered into exclusive negotiations with Schneider Electric (-1.96%, at the bottom of the CAC 40) for the sale of EcoAct and all of its subsidiaries, an operation which will could enable it to complete its program of disposals of non-strategic assets.

AstraZeneca (-8%) fell after announcing the results of a therapeutic trial on lung cancer deemed disappointing.

The announcement of a drop in the supply of Russian and Saudi oil in August supported the oil and gas sector (+1.6%) while in Paris, TotalEnergies rose by 1.8%.

AT WALL STREET

US markets are moving on small variations as the session will be shortened and the holiday Tuesday for Independence Day.

At closing time in Europe, the Dow Jones gained 0.17%, while the Standard & Poor’s 500 advanced 0.06%, and the Nasdaq Composite fell 0.02%.

RATE

The prospects of recession were not enough to drive down yields, which rose again with expectations of higher terminal rates.

On both sides of the Atlantic, policy-sensitive short rates remain at their highest since the March banking crisis. The yield on 2-year US government bonds rose nearly five basis points to 4.9232% and the 2-year Bund rate ended at 3.328%, up six basis points.

The yield on the ten-year German government bond rose five basis pints to 2.44%.

CHANGES

Weak activity data put pressure on the dollar, which remains virtually stable against a basket of benchmark currencies.

The euro rose against the greenback, to 1.0918 dollars (+0.08%), while the pound sterling lost 0.10% to 1.2692 dollars.

OIL

Concerns about growth in developed countries limited gains in oil markets, supported by Russian and Saudi production cuts announced for August.

During a volatile session,

Brent gained 0.37% to $75.71 a barrel and US light crude (West Texas Intermediate, WTI) gained 0.33% to $70.92

(Report Corentin Chapron, edited by Blandine Hénault)

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